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Edward Nelson Dingley 



Unto The Hills 

SOME OF AMERICA'S 
PROBLEMS 

by 
EDWARD NELSON DINGLEY 




1922 
THE STRATFORD COMPANY., Publishers 
Boston, Massachusetts 



.D58 



Copyright, 1922 

The STRATFORD CO., Publishers 

Boston, Mass. 



The Alpine Press, Boston, Mass., U. S. A. 

m 11*22 

©C1AG80612 



"If we lose the smallest share of freedom we have no one to 
blame but ourselves. This country is ours to govern, ours to 
guide, ours to enjoy." — William McKinley, Jr. 



"I believe in God, the living God, in the American people, a 
free brave people, who do not bow the neck or bend the knee 
to any other, and who desire no other to bow the neck or 
bend the knee to them." — George Frisbee Hoar. 



"Not until a man has laid hold upon the absolute assurance 
that the right is right and that the God of righteousness will 
give his strength to the feeblest will in all the universe which 
tries to do right, has a man summoned to his aid the final 
perfect help." — Phillip Brooks. 



Foreword 

WHEN the Psalmist wrote, ''I will lift mine eyes unto 
the hills from whence cometh my help," he recorded 
a profound truth underlying the development of the human 
race. Racial, political and economic progress have been 
possible because men of vision have been able to turn their 
eyes from the dead level of doubt to the living hills of hope. 
Throughout the ages of man, the hills have typified the 
power of personality and embodied the intensity of inspira- 
tion. The restless souls of the great have risen triumphant 
from the fogs and mists of human weakness, reached the 
heights, and, like Moses, viewed the promised land. 

Nations and peoples have made progress only as their 
leaders possessed the power to lift their eyes unto the hills 
and gather from the abodes of the spirit the strength required 
to carry the burdens and responsibilities of their time. 

Who has not experienced the awe and majesty of moun- 
tains and snow-clad hills ? Who has visited the Grand Canon 
without being keenly conscious of an almost unconquerable, 
yea breathless, longing to see the mysteries of the Infinite, 
so near? Who has viewed the mighty works of the Almighty 
in the Rockies or the Alps, without absorbing some of their 
majesty and strength? David knew; and all the leaders 
after him, knew. 

In every epoch and among all nations, temples, shrines, 
mausoleums and structures commemorating historic events, 
have been erected on the hills or elevated places, because the 
thought, the inspiration, the ideal of the builder was beyond 



Foreword 

the common level. Harmony with that ideal demanded a 
sightly place. The very location was a constant invitation 
to lift the eyes unto the hills. The builders of nations realized 
the psychology of lofty ideals, and fashioned them in concrete 
form on the hills where they could be seen. They were 
symbols of religion or government. Their sublimity was 
emphasized by their environment. Whatever progress the 
world has made in three thousand years, either in science, 
invention, civil government or economic thought, has been 
due to this mysterious harmony between ideals of the finite 
mind and the hills of the Infinite. The Psalmist knew. 
Others know now. 

True historians view the record of events from the 
heights, in perspective. They see the connecting links between 
great events, and measure the progress of mankind by the 
success or failure of ideals, by the rise or fall of institutions 
born of those ideals. The problem of the historian is to 
separate the eddies and whirlpools from the main current 
of the stream of human life. Often the forces of materialism 
are mistaken for the more essential ideals of human thought 
and spiritual culture. No historian can ignore these tre- 
mendously powerful forces we call spiritual. They are not 
found in treatises on politics or political economy, or in the 
statistics of trade and commerce; yet they are present and 
constitute an important factor in the modern problem of 
government and human welfare. They can not be discerned 
except when the eyes of the recorder are lifted unto the 
hills. Like all the silent forces of nature, they are the most 
powerful. They are manifest in the lives of all, and may be 
isolated and measured by the economist and the political 
scientist, just as an expert isolates and measures a chemical 
unit. 



Foreword 

The material progress of our country in a century and 
a quarter, has been the marvel of the world. The human 
brain has harnessed the elements, built cities and multiplied 
wealth. Inventions have challenged the miracles of old. We 
travel with the speed of the wind, on land. We fly with the 
birds. We explore the depths of the ocean and travel in 
submarines. We push a button and the night bursts into 
stars. We talk through space and hear voices in the air. 
Thus the material approaches the spiritual, slowly demon- 
strating that our future is wrapped up in and dependent 
upon, the spiritual. 

In harmony with the spiritual uplift of the hills, the 
founders of America located the capitol on the highest avail- 
able spot. This majestic structure is a symbol of enduring 
national life, and a shrine whose towering dome and crowning 
statue of Armed Liberty, afford an inspiring panorama of 
the nation's capital, and a vision of America's future. Here 
the wise and worth-while statesman need not keep his ear 
to the ground, but may lift his eyes unto the hills. Here 
great men may think and lead, and plan to solve America's 
problems. 

The purpose of these chapters is to encourage observers 
of public events and students of national problems, to "lift 
their eyes unto the hills" and see the spiritual forces 
directing America, likewise the mighty course of the stream 
of American life. We can see the truth and gather strength 
for a correct solution of America's problems, only by lifting 
our eyes unto the hills. 

E. N. D. 



Contents 



Chapter 



Page 



Foreword 



I 


The Outlook 


. 1 


II 


Nationalism and Patriotism 


. 8 


III 


Protection and Civilization 


, 16 


IV 


Americanism and Immigration . 


. 24 


V 


What is Sovereignty? .... 


. 33 


VI 


Economic Problems 


. 41 


VII 


Versailles and Internationalism 


. 49 


vm 


A Creditor Nation and Liquidation . 


. 58 


IX 


The Philippines 


. 65 


X 


Gold Standard and Foreign Exchange 


. 72 


XI 


Fatal Effects of Europe's Currency . 


. 82 


XII 


Economics of Peace With Germany . 


. 91 


XIII 


Causes of the Agricultural Crisis 


. 99 


XIV 


Our Banking Sj^stem 


. 110 


XV 


A Merchant Marine 


. 118 


XVI 


Panama and Free Tolls .... 


. 126 


XVII 


''Most Favored Nation" .... 


. 132 


XVIII 


A World Economic Conference . 


. 141 


XIX 


Economic Consequences of the Arms Conference 149 


XX 


The Monroe Doctrine .... 


. 156 


XXI 


Why Political Parties? .... 


. 165 


XXII 


Congress 


. 176 


XXIII 


What is Democracy? 


. 185 


XXIV 


Moral and Spiritual Forces in Government 


. 192 



CHAPTER I 
The Outlook 

IT IS fortunate that the American people are blessed with 
a spirit of optimism. It had its birth in the indomitable 
spirit of the fathers and mothers, who, three hundred years 
ago established an empire and laid the foundations of what 
has proved to be an agricultural, industrial and financial 
world leadership. Often it is said they built better than 
they knew; yet it is not impossible that some had a vision 
of the future too spiritual and apocalyptic to record. 

It is a far cry from Jamestown to Washington of today ; 
from Plymouth Rock to the Congressional Library and the 
Washington and Lincoln memorials. In that long intervening 
period can be visualized a panorama of devoted men and 
women, lofty ideals and ambitions, stern endeavor and 
achievement, marked by unerring progress and inevitable 
triumph. 

Today the civilized world stands in amazement at the 
portals of America, and marvels at the magnitude of human 
endeavor when prompted by liberty and high resolve. 

Confidence is the heritage of this generation. The -opti- 
mism of ancestors hovers near, like a benediction. The hope of 
democracies and republics, lies in eternal conviction that 
a majority, knowing the facts and the truth, invariably 
decides and acts for the welfare of all. No crisis has over- 
whelmed this republic, because its foundation stones are laid 
in the firm belief that Providence watches over the affairs 
of people, if permitted to come in and abide. It is significant 

[I] 



Unto The Hills 

that the framers of the Federal Constitution, in the city of 
Philadelphia, were unable to agree or to frame a document 
acceptable to a majority until Benjamin Franklin reminded 
the delegates that they had failed to ask for help and guidance 
from above. 

It is the fashion among not a few otherwise shrewd and 
sensible students of history and observers of current events, 
to call forth the ghosts of centuries gone, the horrors of 
revolutions, the fall of empires and the cruelties and wrongs 
of rulers and dynasties, the tyranny of gold and the power 
that goes with it. It is the fashion in some circles to point 
a warning finger and nod the head knowingly, as if the 
cynic were clothed with some superhuman power to divine 
the future, to write the nation's horoscope and predict its 
downfall. The misanthrope, the croaking raven in human 
garb, delights in tales of national disaster. All are false — 
born of a false understanding and analysis of American life. 
After all critics, in their assumed wisdom, have told of the 
perils and pitfals of the Republic, the weakness of our 
form of government and the impossibilities of democracies, 
somehow every crisis is passed safely and the people emerge 
stronger and more sanguine than before. 

There is no concealing the fact that the people of America 
face a crisis now — a crisis of no small proportions. It has 
two phases — social and spiritual on the one hand, economical 
and financial on the -other. In its spiritual phase, America is 
undergoing a social or spiritual revolution. Our democracy 
is not a failure, however, because there appears to be an in- 
crease of crime, scandal and bad conduct in high places. Too 
often there is a failure to apply to moral affairs and religious 
matters, the same rule of averages, the same test, applied to 
other departments of life. One hundred per cent efficiency is 

[2] 



The Outlook 

expected in the religious and spiritual world, while only 
seventy-five or eighty per cent efficiency is expected elsewhere. 
It can not be gainsaid that the social, moral and spiritual level 
of America is far higher today than it was fifty or a hundred 
years ago, despite appearances to the contrary. We hear 
promptly of the one who goes wrong, and seldom if ever hear 
of the ninety and nine who go right. The lost sheep is the most 
talked about, and makes the most noise. The route of national 
life for centuries has been upward, constantly. America leads 
morally and spiritually, because its chariot is guided by men 
and women who do not crowd out Providence. 

Nor is the thoughtful student of current events unmind- 
ful of the existence of an economic crisis. It is apparent in 
all sections and among all classes. No one event or fact is 
responsible for this; it is the result of the law of cause and 
effect. There are some things even a republic of unusual vigor 
and strength can not do, without inevitable suffering. A 
violation of the laws of economics brings disaster to the 
national body, just as a violation -of the laws of health brings 
physical disaster to the oft'ender. In the physical and mate- 
rial world, nature presents its little bill, always. In the 
economic world, nature does likewise. The cure of the indi- 
vidual can be wrought only after great suffering and long 
recuperation. The cure 'of the republic can be accomplished 
only after all have borne their share of the burden and the 
suffering. 

An economic illness spares nobody. All suffer. Ameri- 
cans, both those -of large and small means, are in travail today 
because of a violation of the fundamental laws of economics. 
The first cause is war; the contributing cause is national ex- 
travagance, waste and recklessness. What once had the 
appearance of unprecedented prosperity turns out to be a 

[3] 



Unto The Hills 

shadow — a bubble. What promised to be national wealth 
is ashes. High prices and high living have been the product 
of wild inflation and the printing press. Once more it has 
been demonstrated that Congress and the federal government 
can not create wealth and make people rich and happy. There 
is only one road to permanent wealth, and that is by industry, 
work and thrift. Most of the war time fortunes have dis- 
appeared, because they were accumulated contrary to the 
ordinary rules of sound economics. What is obtained quickly 
and without much effort, departs as quickly and with the 
same lack of effort. Experience teaches that to get rich 
quickly is to get poor quickly. 

The unparalleled unemployment was the result of a viola- 
tion of the normal economic laws under which wealth is 
created and distributed. Lured by an international mirage, 
an ignis fatuus, America lost its bearings and drifted. It 
forgot its real mission — the making and preservation of 
America first, the protection of Americans first. The war, 
begun and conducted to stamp out tyranny not only in 
Europe but in America, resulted in economic disaster to 
America. Men and women will fight for an ideal, will struggle 
to save liberty; but when the fighting is over they demand 
the economic fruits of liberty. Idle men and women with 
empty stomachs do not make good patriots. The war lost its 
glamor when the pinch of no-work and no-food came. The 
fever of world-patriotism has had its run. Now the suffer- 
ers demand employment and a chance to live in an America 
worth while. Three years of economic debauch bring the 
republic face to face with a tremendous problem. It can not 
be solved in a day, nor a month nor a year. But it will be 
solved in time, as other great national problems have been 
solved. 

[4] 



The Outlook 

Linked to the economic crisis is the financial crisis. It is 
staggering, but must be met with courage and confidence. 
Likewise this crisis has its genesis in the war, its growth in 
national waste, and its culmination in almost criminal extrav- 
agence. The problem is serious in the extreme, and must be 
met. It can be overcome only with the aid of loyal and 
patriotic citizens. 

There can be no return to employment, no resumed pros- 
perity, no ''good times" until the nation's finances are put 
in order, credit money reduced, inflating of currency stopped, 
and prices due to inflation, lowered. 

The credit of the republic measures the value of its 
obligations, including both bonds and notes. Its bonds were 
below par because there were so many of them. Its notes 
(federal reserve and others) had about 50 or 60 per cent of 
their purchasing power as compared with 1914, because there 
were so many of them. The process of recovery, of a return 
to normal conditions, will be tedious and prolonged. It is 
useless to promise a miracle. Congress can not create wealth 
or restore former conditions by a mere fiat. Eecovery will be 
a matter of years. Congress can help the operation of the 
laws of finance, that is all. 

It is impossible to exaggerate the seriousness of the finan- 
cial situation, yet the optimism and confidence of the fathers 
and mothers of early days are manifest in the halls of legis- 
lation and in the hearts and minds of patriots. 

The republic never faced before such an appalling situa- 
tion as confronts it today. In 1820, at the close of the war of 
1812, the public interest-bearing debt was $91,000,000, or 
$9.44 per capita. In 1850, at the close of the Mexican war, the 
public debt was $63,000,000, or $2.74 per capita. In 1866, at 
the close of the Civil War, the public interest bearing debt 

[5] 



Unto The Hills 

was $2,636,000,000, or $74.32 per capita. In 1899, at the 
close of the Spanish-American war, the interest bearing debt 
was $1,044,000,000, or $15.55 per capita. In 1919, at the 
close of the great World war, the public interest-bearing debt 
of the United States was $26,596,000,000, or $228,63 per 
capita/ 

The great war cost the United States $32,830,000,000 in- 
cluding the credits to the allies, or $23,424,000,000 excluding 
those credits. The war of 1917-18 cost the United States ap- 
proximately six times the total cost of the Revolutionary war, 
the war of 1812, the Mexican war, the Civil war, and the 
Spanish- American war, combined. 

The figures demonstrate that the eight years between 
July 1, 1913, and July 1, 1921, were the most costly and 
extravagant in the whole history of the republic. This state- 
ment has been made repeatedly, but it is most startling when 
visualized. During this period the federal government col- 
lected $85,789,000,000 and spent $87,800,000,000. These re- 
ceipts and expenditures respectively, were more than the 
entire receipts or expenditures of the federal government for 
seventy-five years previous, including three wars. 

During the fiscal year 1919 alone, 12 departments of the 
federal government expended $46,609,000 on account of 
''National Security and Defense." This was in addition to 
the regular and 'ordinary appropriations for the several de- 
partments. Government construction and operation of ships, 
and government operation of the railroads required the 
expenditure of $7,000,000,000. 

This analysis of the financial situation reveals the biggest 
problem of the hour. There is no short way out. The road 
•of extravagance, waste and recklessness must be retraced to 



1 June 30, 1922, the interest-bearing debt was $22,963,000,000. 

[6] 



The Outlook 

the safe and solid abode of financial solvency and economic 
equilibrium. All must share the burden. The journey may 
be long and tiresome. 

To guide the republic through the fog and amid the 
shoals; to rescue the nation from peril if not disaster, is the 
great work -of this generation. 

This outline of the situation and the problem challenges 
the patriotism, patience and pride of every citizen. The pres- 
ent duty is to justify and perpetuate the faith and optimism 
of the founders of the republic. 



[7] 



CHAPTER II 

Nationalism and Patriotism 

NO MORE inspiring scene has been enacted in the halls 
of Congress in recent years, than when the resolution 
to enter the world war was adopted. The air was charged 
with enthusiasm and patriotism, reverberating to the farthest 
confines of America. What was the impelling force? Na- 
tionalism and the spiritual power that accompanies it always. 
The eyes of all true Americans were lifted unto the hills. It 
was a sublime moment. 

The United States did not enter the world war to make 
the world safe for democracy, but to save American national- 
ism. Viscount Grey said truly: ''The allies have been fight- 
ing for the same idea of national human liberty as the United 
States, but fighting also for the immediate preservation of 
national existence in Europe. '' England fought for her 
existence as a nation. So did France and Italy and the 
United States. 

Congress enacted laws to protect and promote national- 
ism. Violators of the espionage law were punished severely. 
Disloyalty to the flag and the cause brought swift retribution. 
Conscientious objectors to the draft law were subjected to 
close examination, and were a synonym of mental and physical 
cowardice. This was a manifestation of nationalism to the 
highest degree. 

While our soldiers were helping in the cause of nation- 
alism and civilization, many who remained at home in safety, 

[8] 



Nationalism and Patriotism 

not only evaded their duties and responsibilities, but sowed 
seeds of doubt and disloyalty in the field of nationalism. 
Wrote one: ''The immoral aim of national expansion and 
self-sufficiency gives way to the moral aim of the brother- 
hood of mankind and the solidarity of human interest." 
Another wrote : ' ' There must be a partial surrender of these 
ambitions which nationality, in its blind seeking for self- 
determination, has inhibited." Said another in an address 
in Philadelphia : ' ' The root of war lies far less in competitive 
capitalism than in competitive nationalism. Nationalism is 
an instrument created by disorganization and can serve only 
disorganization. ' * 

At this writing, there exist organizations and private 
propagandists seeking to destroy the spirit of American 
nationalism. It comes from foreign sources or their allied 
interests in America, largely. He is blind to passing events 
who denies this. It is possible to write the names and active 
officials of many of these organizations created ostensibly to 
promote peace and brotherhood, but really to rob the United 
States of its birthright. Even many of our school histories 
are rewritten with the spirit of American nationalism, which 
the founders and fathers of the Republic created, omitted. 
The insidious purpose is to teach the coming generations in 
America, that nationalism is a myth and national heroes of 
little account. Lecturers and writers from foreign lands 
preach the doctrine of internationalism, and seek to rob us of 
all we and our forbears have held dear for more than three 
hundred years. In a recent address almost under the shadow 
of the capitol, a United States judge said: ''The Declaration 
of Independence and the Constitution of the United States 
would not have been written if some of the most ardent 

[9] 



Unto The Hills 

exponents of so-called Americanism of today had been living 
at that time/ 

Business and industrial America must be awake to the 
fact that insidious forces are seeking to change the current 
of our national life, and revolutionize fundamental principles 
of economic and political evolution. Our ancient landmarks 
are being destroyed; and social, industrial and political ex- 
periments are offered as antidotes for all human ills. We are 
being lulled to sleep by soft words. 

America faces a crisis because of the nostrums handed 
out by an army of quacks burdened with much theory and 
blessed with little practice or experience. Strong men, sturdy 
men, practical men, are needed now more than ever, to point 
out the dangers ere the Ship of State is wrecked on the shoals 
of world brotherhood, or on the rocks of false internationalism 
— a disaster that if it comes, will be due to a failure to 
follow the milestones of history and to profit by the exper- 
iences of mankind. It is said that nationalism is immoral. 
This is a summary way of disposing of the great march of his- 
toric events since the world began. Was America's national 
expansion immoral? On the contrary, America owes her 
national power to the inspiration of the fires of nationalism. 

After the fall of Rome, Europe learned, at the cost of 
centuries of anarchy, that the destruction of the principle of 
nationalism was an utterly false method of establishing and 
prom-oting civilization. The Thirty Years' War will live 



1 In the Senate June 5, 1922, Senator Watson of Indiana referred at length 
to the activity of certain foreign representatives and foreign writers^ and 
speakers in the United States. Among other things he said: "I for one insist 
that these gentlemen wrho come here to represent foreign nations should not 
undertake to dictate to us what our policy skall be . . . I desire as one Senator, 
to resent intereference from abroad in our domestic affairs." The Boston City 
Council has passed an order calling upon the trustees of the Boston Public 
Library, to ban from its shelves a recently published anglicized volume entitled 
"Book of American Wars," on the ground that it "grossly misrepresents heroic 
characters and events." 

[10] 



Nationalism and Patriotism 

forever as a tale of horror ; but its close marked the eclipse of 
the aim of world dominion and world citizenship, such as 
many Romans cherished, and witnessed the definite appear- 
ance of territorial nationality. Then came Hugo Grotius, 
giving the world its first clear definition of international 
rights. Three centuries of war brought territorial settle- 
ment which is essential to any stable civilization. It was the 
birth of the nation. 

Democracy has m'oved forward in perfect step with 
nationalism. Freedom and self-government have been pos- 
sible only under the protecting care of nationalism. The 
national spirit has spelled progress, education, civilization. 
Washington never lost sight of a nation in the western world. 
Garibaldi, exiled, never turned aside from his purpose of 
making Italy a free nation. When a people loses its spirit 
of nationality, decay follows speedily. Edward Everett Hale 
told the story of nationalism in The Man Without a Country. 
Said Nolan : ' ' If you are ever tempted to say a word or to do 
a thing that shall put a bar between you and your family, 
your home and your country, pray God in His mercy to take 
you that instant home to His own Heaven . . . And for your 
country and for that flag, never dream a dream but of serving 
her as she bids you, though the service carry you through a 
thousand hells." 

Now it is proposed by some to turn back the hands of 
the clock, and submerge nationalism in some sort of inter- 
nationalism. Already America, an independent nation, is 
vexed and tried with many problems certain to tax the wis- 
dom, skill and ingenuity 'of our strongest, safest and best 
men and women. We are facing grave dangers, both indus- 
trial and economic, as well as political. Democracy at home 
is an experiment still. Will an international political alliance 

[II] 



Unto The Bills 

make our problems less serious and acute? The problems 
of peace are as serious as the problems of war. Peace and 
world brotherhood will not eliminate the problems of com- 
mercial competition. They are right upon us. We can win 
only by adhering to nationalism and patriotism. In 1918 
a writer in the British Fortnightly Review said: ''When the 
war ends, the nations which have destroyed their accumulated 
wealth must work the more feverishly to renew and replace 
their lost capital. If that be the world's commercial position, 
how can it be pretended that the normal relationship of one 
state to another will be that of friendly neighborliness ? " 
These wise words apply to America as well as to Great Britain. 
The United States can promote the cause of peace best by 
remaining independent — a strong, virile and proud nation, 
protecting herself against 'Other nations, yet at the same time 
contributing generously to human brotherhood and world 
progress. 

The world war, in which so many brave Americans gave 
their all, ought to make a new America by inspiring a new 
nationalism. That nationalism, more than ever, should take 
the form of preparedness for peace as well as war, of protec- 
tion in all forms, and of sacrifice for established institutions. 
The test of democracy is nationalism. Our boasted democracy 
long since disappeared in a Republic. Let all patriots unite 
in making America a safe republic, a safe nation, in which 
to live. That is a problem sufficiently large and important 
to absorb the attention of this and succeeding generations. 

The late Theodore Roosevelt wrote: "Patriotism was 
once defined as the 'last refuge of a scoundrel.' Dr. Johnson 
was a cynic and did not comprehend the full meaning of 
patriotism. He failed to realize that love of country is one 
of the elemental virtues, even though scoundrels play upon 

[12] 



Nationalism and Patriotism 

it for their own selfish ends.'* Again he wrote: ''There are 
philosophers who assure us that in the future, patriotism will 
be regarded not as a virtue at all, but merely as a mental 
stage in the journey toward a state of feeling when our 
patriotism will include the whole human race and all the 
world. That may be so ; but the age of which these philoso- 
phers speak is still several aeons distant. In fact, philosophers 
of this type are so very advanced that they are of no practical 

service to the present generation As things now are 

and have been for two or three thousand years past and are 
likely to be, for two or three thousand years to come, the 
words 'home' and 'country' mean a great deal. Nor do they 
show any tendency to lose their significance. At present, 
treason ranks as one of the worst of all possible crimes." 
Again he wrote: "No one of our people can do any work 
really worth doing, unless he does it primarily as an Ameri- 
can. He who deserts America and lives abroad, does not 
really become a European, he only ceases being an American, 
and becomes nothing." Again he said: "Americanism is 
a question of spirit, conviction and purpose, not of creed or 
birthplace. ' ' 

We are concerned with the great drama of the present 
and the future. It forbids us to look at the future with 
blind and careless optimism. Said Mr. Roosevelt: "We must 
neither surrender ourselves to a foolish optimism nor succumb 
to a timid and ignoble pessimism. Our nation is that one 
among all the nations of the earth which holds in its hands 
the fate of the coming years. We enjoy exceptional advan- 
tages, and are menaced by exceptional dangers, and all signs 
indicate that we shall either fail greatly or succeed greatly. 
I firmly believe that we shall succeed; but we must not 

[13] 



Unto The Hills 

foolishly blink at the dangers by which we are threatened, for 
that is the way to fail." 

Viscount Bryce said : ' ' Race sentiment is one of the ele- 
ments which go to make up national sentiment and national 
pride. It helps to make a people cohesive. Race conscious- 
ness is the core of nationality. ' ' 

Francis Lieber said: ''Without a national character, 
states can not obtain that longevity and continuity of political 
society which is necessary for our progress. Even our patriot- 
ism has become pre-eminently national." 

Someone has said : " A nation is a collective memory and 
a collective hope. It is cemented in remembered sacrifice and 
maintained by expected devotion. ' ' 

Nationalism and patriotism have promoted civilization, 
stirred the souls of millions, given the world its best poetry 
and song, and tuned the harp-strings of melody to the heart- 
throbs of humanity. 

God forbid that we should lose either nationalism or 
patriotism ! 

In a speech delivered in the Senate July 26, 1917, Senat-or 
Borah discussed the causes and consequences of the entrance 
of the United States into the world war. Here are a few 
words from this eloquent, patriotic and American speech: 
''After we have declared war and taken steps upon the part 
of the Government which necessarily follow, we come then to 
deal with another world entirely. "We leave the field of form 
and formality to find ourselves in the world of the concrete, 
of the real, where hearts throb and grieve and men are pre- 
pared to suffer and die. From this forward we must deal 
with the man on the street, in the field, and in the factory; 
the man of simple and fixed, but noble national instincts ; the 
man, bless God, in whose moral and intellectual fiber are 



Nationalism and Patriotism 

ingrained the teachings and traditions and aspirations of a 
century of national life — a national life separate, distinct, 
exceptional and sublime. Y-ou will not change these things 
overnight. The American citizen must live his character ; you 
can not transplant in a few weeks the habits and ideas, the 
methods and ways of other people. We have our allies, and 
with them a common purpose, but America is still America, 
with her own institutions, her individuality, the moral and 
intellectual conceptions -of her own people; she is still a sun 
and not a satellite. Sir, if our own institutions are not at 
stake, if the security of our own country is not involved, if 
we as a people and as a Nation are not fighting for our own 
rights and the honor and lives of our own people, our declara- 
tion of war was a bold and impudent betrayal of a whole 
people, and its further continuance a conspiracy against every 
home in the land." 



[15] 



CHAPTER III 
Protection and Civilization 

IN THESE post-war and readjustment days, there has 
appeared a school of economists declaring that new world 
conditions impose upon America a departure from the tried 
precepts of ''America for Americans," and a substitution 
therefor of "America for the world." It is asserted that 
patriotism is national selfishness and protection is isolation. 
It is argned that civilization will be lost unless America plays 
her part in world problems by surrendering American prob- 
lems. It is claimed that nationalism is a peril and a cause 
of war. 

Organized society presupposes separation into sub- 
divisions marked by differentiating characteristics, languages 
and living. Color of skin, texture of brain, and structure of 
face and body, separate the human family as much as form, 
habit and inherent instinct separate the birds of the air, the 
lower orders of animals and the fish 'of the sea. 

Mountains, rivers and oceans are natural barriers against 
amalgamation. Tribes, cities, communities and nations, dwell 
separately, because a physical union of humanity is imprac- 
ticable, impossible. What we call civilization is the outgrowth 
of a variety of social 'organizations for their own welfare. 
When the empires of old undertook world dominion and 
universal authority, they fell of their own weight; and na- 
tions of limited territory, concentrated populations and com- 
mon interests, took their place. The recent war in Europe 

[i6] 



Protection and Civilization 

accentuated this tendency, for a dozen new nations arose 
therefrom. 

The long struggle for human liberty and constitutional 
government in representative form, never could have been 
successful without this separation into nations for the common 
defence and general welfare. Art, science, literature and 
government have been the outgrowth of separation, individual 
liberty and initiative, and the protection afforded by social 
organizations founded on law and order. 

Governments, of whatever form, exist for the protection 
of the governed. That protection is measured by the degree 
of safety to life, liberty and property, and the degree of 
freedom consistent with the rights "of others. Protection 
fosters and promotes love of country and pride of patriotism. 
Protection makes for mutual interest and co-operation and 
cultivates a spirit of brotherhood. Protection is not only an 
economic force ; it means not only machinery and wages, but 
moral and spiritual well-being. Viewed from this vantage 
point, protection is not isolation, it is not selfishness. On the 
contrary it is unselfish, and helpful to co-operation. 

Too often national protection is measured in terms of 
import duties at the custom houses. This is only the first eco- 
nomic symptom 'of a great spiritual force touching the hearts 
and souls of all within its zone. Like the waves of sound or 
the flash of electricity, this force reaches out and in some 
degree, affects the lives of other nationals. Protection is not 
isolation, it is human welfare. 

No longer is political economy, or the principle of pro- 
tection, a material science only. Whatever touches life touches 
not only the material, but the spiritual. It may sound strange 
to talk of economics in terms of spirit or soul life ; nevertheless 
a new light has penetrated this hitherto cold and calculating 

[17] 



Unto The Hills 

cloister, and political economy and the doctrine of protection 
throb and pulsate with concepts higher than national well- 
being. Protection can not be isolation, for it is a part of the 
great soul of humanity. 

Patriotism is a manifestation 'of this higher form of pro- 
tection, transcending anything material. Patriotism can not 
be measured by economic rules or formulas, nor by the yard- 
stick or scales. It is of the nature of spirit and soul, and as 
far removed from selfishness as the two poles of the hemis- 
phere we inhabit are removed from each other. This love 
of country that we call patriotism is not out of harmony with 
love of humanity, because it is spiritual ; and whatever is spir- 
itual is universal. So that, when patriotism is analyzed or 
translated into cosmic terms, it is perfectly consistent with 
love of humanity and world brotherhood, of which we hear 
so much. Since the principle of protection is synonymous 
with patriotism, when measured by the same rules we apply 
to patriotism, protection is not inconsistent with world 
brotherhood. 

If we start with the hypothesis that protection and 
national patriotism deal with the material and nothing else, 
there is but one conclusion, but one end of the road, namely 
selfishness, isolation and possible deterioration and disappear- 
ance of what we call civilization. If we take a higher view 
of patriotism and its prototype protection, we are led straight 
to the conclusion that both are manifestations of what is best 
in human life. 

The world war was a great shock to so-called civilization. 
It is claimed that the old order has broken down, and that 
nationalism, patriotism and protection have proved futile. 
Every country is struggling to the breaking point with the 
tragic problems of the times. Not a few pronounce Chris- 

[i8] 



Protection and Civilization 

tianity a failure, because it could not or did not avert war. 
Established systems and accepted principles seem to be shak- 
ing like reeds in the wind. The moorings of humanity are 
said to be shifting, and the world appears to be crying 
for reconstruction. In the midst of this appeal are the 
sordid remedies of the materialist, the quack remedies of the 
Communist and the Socialist, all taking advantage of the 
temporary disaster. The social scientist suggests drastic eco- 
nomic revolution. The internationalist suggests free trade. 
The communist, unmindful of Russia, suggests the destruc- 
tion of capitalism and private property as a cure for greed. 
There is a united assault upon the citadel of nationalism, 
patriotism and protection. These landmarks must be swept 
away, it is said, to save civilization, and America must take 
the lead. 

This social upheaval is due to a misconception of the 
cause of the war and the remedy to be applied to the malady. 
While all wars are, superficially, essentially economic, the real 
causes lie back of that. Civilization and world brotherhood 
collapsed in 1914, not because of nationalism, patriotism or 
protection, but because these attributes of human nature were 
measured in terms of economic materialism. The remedy is 
not their eradication, but their proper application and inter- 
pretation. Then they will aid and promote the right sort 
of civilization, and offer an effective remedy for the ills of 
society. 

Most of the contributed remedies for the social and 
economic maladies of the times, are founded on materialistic 
philosophy. They rest on the 'outer-construction of society. 
No such panacea for the relations of men will be adequate or 
permanent. The remedy must be within, not without. There 

[19] 



Unto The Hills 

must be a full and complete reorganization of the spiritual 
forces of recovery. In the present world crisis, cold eco- 
nomics, taxation, balance of trade, rate of exchange, and all 
kindred remedies, important as they are, never will be com- 
pletely effective without the assistance of spiritual forces. 
Of these forces, patriotism, love of country and protection 
are living examples. 

The highest attributes of human nature are spiritual and 
moral. If these attributes are marshaled, if the inner life of 
America is mobilized, they will save the civilization, not only 
of America, but of the whole world ; if they are sacrificed on 
the altar -of economics and materialism ; if the heart and soul 
and spirit of America are harnessed to a mere mechanism or 
material structure, no cure will be effected. Furthermore, 
a greater disaster than the last war may be not far ahead. 

The only solid foundation stones left in this troubled 
world are moral and spiritual. If they are removed, the whole 
structure may fall. Neither American nor world regeneration 
can come from political or economic reorganization alone, but 
from the moral and spiritual resources of men. Politics and 
economics must be lifted to a higher level. Then will come 
a campaign for lasting human betterment. 

America was born in the cradle of liberty, nurtured in 
the lap of patriotism and matured under the fostering care of 
protection. These inheritances are moral and spiritual, mak- 
ing possible the economic triumph of later years. Nor did 
these attributes blind Americans to their duty to the back- 
ward and suffering in all climes. Christian missionaries from 
our shores evangelized much of the world, established 
churches and schools, all in the name of American civilization 
made potent by American patriotism, love of country and 

[20] 



Protection and Civilization 

protection. Materialism has never been the mainspring of 
American progress. Economic formulas will fail so long as 
they assume the entire responsibility for the salvation of the 
world. 

The philosophy of economics must be harmonized with a 
higher philosophy if the world is to be redeemed. Doubtless 
such harmony may seem impossible to the materialist and the 
naturalist, to the student of economics who thinks in terms of 
commodities only. Yet analysis of economics demonstrates 
the eternal truth that nothing in that so-called science endures 
unless closely allied to the spiritual and the moral; and by 
that is meant the forces that contribute to the higher and 
better life. 

Throughout the decades since economics became an accep- 
ted science, America has pointed the way to a more desiraible 
civilization, because its enduring political activity, its social 
progress and its legislation, in the main, have been spiritual 
and moral, not material w^holly. The church and the school 
house have been essential factors in America's scheme of 
social organization. Patriotism, love of country and protec- 
tion, all spiritual and moral attributes, have been predominant 
in American life. To destroy them is to disintegrate the 
highest ideals upon which, it is conceded, the world leans in 
this hour of tribulation. 

No League or Association of Nations can save civilization 
if boundaries, trade, commerce, limited armaments, and 
materialism are the guiding and dominating forces. Peace 
and brotherhood will not prevail if only a new mechanism is 
secured. Democracy of social order alone will not redeem 
the world and save civilization. There must be a reformation 
of the inner, not the outer world, a revival of every m'oral and 

[21] 



Unto The Hills 

spiritual force within the individal, an earnest effort to pre- 
serve and protect the only forces that have endured or can 
endure, namely, the spiritual forces. 

Civilization is staggering. There is no doubt of it. But 
recovery is certain in time, provided the cure is sought within, 
rather than without. With its eyes fixed, not on politics, not 
on self-aggrandizement, not on economics; but on the inner 
world of spiritual power, America can and will assist, yea 
lead, in the salvation of the world. A political alliance, a 
material association, will be a temporary alleviation only, a 
postponement of the hour when all may be lost. Faith in 
America's conception of national life, reliance upon the ideals 
which inspired and lifted the fathers and mothers of days 
gone by, will solve the problem and bring light out of dark- 
ness. 

Often it is said that the result of the war is a new world 
wherein established systems must give way to new, economic 
rules and formulas must surrender to new relationships, and 
the national spirit must succumb to the cosmic idea. On the 
contrary, the world has not changed materially. Human 
nature has not altered appreciably. Because of this static 
condition, war came; and if this condition prevails, other 
wars will follow. Social and economic science can not effect 
a cure if the spiritual and moral elements, which alone have 
prevented a total collapse, are suppressed or ignored. The 
trouble is that the world and human nature have not changed 
and can not change by the mere mechanical application of 
external remedies. There must be a complete surrender to 
the powerful inner forces. 

To sum up, national life, liberty and all legitimate forms 
of protection, are spiritual and moral essentially. To con- 

[22] 



Protection and Civilisation 

fuse them with material economies and physical machinery, 
is to invite disaster. 

Man can not live by bread alone, neither can nations. 
The eternal truth is spiritual and moral. ''Ye shall know 
the truth and the truth shall make you free." 



[23] 



CHAPTER IV 

Americanism and Immigration 

WHAT is an American ? Have we any pure Americans ? 
What is Americanism? Is it in danger? 

Hamilton Mabie says, "There is no absolute purity of 
race." This may be true; probably is. But does it militate 
against American ideals? Will it destroy Americanism and 
the American spirit? If so, what must be done to save 
America and preserve the American spirit? It is said that 
there are fifty-six different nationalities or languages in the 
United States, and unless something is done to check immi- 
gration, in another quarter of a century, three-fourths of our 
population will be of foreign extraction. 

In approaching this serious problem, it is well to con- 
sider briefly : What is an American ? He is a man of action, 
never static; he is a man of business; he saves time in order 
to be efficient. American ideals gather about big things and 
flourish in the atmosphere of immensity. He sees big lakes, 
big rivers, big mountains, fast trains and the tallest buildings. 
He is called a money-worshipper, yet his increase in wealth 
only invigorates his Americanism. To the American, dollars 
signify opportunity. The economic ideal underlying it all is 
the realization of a dream. Some one has said that Americans 
are ''the strong wings upon which he mounts to greater 
heights." They are the means to make his dreams come true. 
An American feels that he is a part of his country, and a vital 
force in his country's destiny. 

Beneath the rough exterior of an American business man 




to 
U 



Americanism and Immigration 

beats a tender heart and dwells a love for the beautiful. His 
very struggles against adversity, his innate desire to see the 
other man succeed, makes him generous and sympathetic. 
Every year the gifts of American business men to all sorts 
of philanthropic and charitable institutions amount to more 
than half a billion of dollars. Men are learning that riches 
and wealth are given to the fortunate few in trust for the 
less fortunate many. Beneath the dollar sign there is love, 
kindness, charity, benevolence. There is nothing like it in 
all the world. 

The American spirit is to believe that there is more good 
than bad in the world; that America offers a square deal to 
all who offer a square deal in return. The morals of America 
are on an infinitely higher level than in any other country. 
Churches, schools, and colleges count for more, and religion 
means m'ore in America than elsewhere. There is a flavor 
of human interest or humor, and spiritual uplift, in American 
literature not found elsewhere. American writers of the last 
and the present century breathe the spirit of America and 
reveal the soul of American life. 

The national characteristics of America create the 
American spirit of self-reliance, of helpfulness, of neighbor- 
liness. Kipling is said to have written: ''The Frenchman 
has no use for liberty or fraternity, but loves equality; the 
Englishman does not like fraternity or equality, but liberty; 
while the American cares less for equality or liberty, but 
more for fraternity." 

Matthew Arnold visited this country and wrote: 
"America's dangers are self-glorification and self-deception.'' 
This may be an Englishman's views; but if correct, it is a vir- 
tue and not a vice. Americans are loath to give their true 
color to a transient Englishman. If Americans are boastful, 



Unto The Hills 

they have much of which to boast; if they are self-deceived, 
they do not deceive others since they are frank always. Yet what 
appears to be boastful to an Englishman, is American enthus- 
iasm; and what appears to be self-deception is American 
idealism dreaming. The Englishman has no such experiences. 
The true American places the man -or woman of deeds on a 
pedestal of honor and national regard to which mere inheri- 
tance of wealth never aspires. Lincoln typifies the ''heart 
quality'' of America. In the words of a great writer, the 
American ''though fragile as a reed, removes mountains spir- 
itual as well as physical." 

There are scores of organizations, public and private, 
whose mission is to Americanize the immigrant. They are 
doing marvelous work. Are they teaching the immigrant the 
fundamentals of Americanism? While it is true that the 
most obvious expression of the American spirit is the political 
organization of the nation, it is not enough to teach that, 
important as it is. The leaven 'of Americanism must come 
through the atmosphere, through example, through education 
of the heart and the soul more than the head. The average 
immigrant comes to America "a tossing atom in a seething 
crowd." To reach him, there must be no prejudice or antip- 
athy; an abundance of education, and an inspiration to be 
identified with the affairs of America. 

The problem is all the greater when we recall that 72 
per cent, of our immigrants are in the large cities, and 51 
per cent, in New York city; that 47 per cent, 'of our own 
people were bom in some other country than the United 
States, or had one ancester born in some other country ; and 
that only about one-third of that 47 per cent, is of English 
speaking birth -or parentage. 

Americanism and immigration are closely associated. It 

[26] 



Americanism and Immigration 

might be stated with some degree of accuracy, that the level 
of Americanism is determined by immigration, largely. While 
it is true that our ancestors, the original settlers who came 
to Pemaquid, Plymouth and Jamestown, all were foreigners 
from the point -of view of the aborigines and the Indians, 
there must be established some starting point, some line of 
differentiation between what we call Americans and what 
we call foreigners. The date of naturalization does not wholly 
supply that line. That is individual. What we are search- 
ing for is a line or a date where we may fairly say that real 
Americans began to exist. 

The population of the United States in 1790 was 3,929,- 
214. In 1820 (when the first statistics as to immigration are 
given,) the population was 9,638,453. In 1840 the population 
had increased to 17,000,000. The total reported immigration 
between the years 1820 and 1840 was 106,373, which was only 
about 11/2 per cent, of the total increase in population during 
those years. The year 1840 was the first year when immigra- 
tion assumed what might be called large proportions. Hence 
the year 1840 might properly be selected as the line of demar- 
cation between what we call Americans and foreigners, since 
large immigration began that year. 

It is interesting and significant to note that between 
1840 and 1922, more than 28,280,000 immigrants arrived in 
the United States. The population of the United States in- 
creased about 83,000,000 during that 82 years. Immigration 
accounted for about 36 per cent, of this increase. The largest 
immigration was in the years 1905, 1906, 1907, 1910, 1913, 
and 1914. In the latter year 1,218,480 immigrants came to 
our shores. In that year (1914) the largest number of immi- 
grants came from Italy, Poland, Germany, Greece and Great 
Britain. In 1915 immigration declined rapidly, due primarily 

[27] 



Unto The Hills 

to the world war. In 1918 it was only 110,618. Immi- 
grants from 29 different countries, speaking 20 different lan- 
guages, arrived here between 1871 and 1921, thus testifying 
to the cosmopolitan character 'of our population. 

Chief Justice Taney decided long ago that *'the people 
of the United States" and "citizens" are synonymous terms 
and mean the same thing. So the people of the United States 
are the citizens thereof. The number not citizens is esti- 
mated between 12,000,000 and 13,000,000. Our white popu- 
lation of native parentage is about 53 per cent, of the whole. 
About 47 per cent, is of alien race, or have one or both 
parents foreign born. Says Representative Albert Johnson 
of the latter: "Potentially good citizens, to be sure, but too 
many of them are quite ready to fight Europe's battles right 
here on our soul, which is, of course, their soil also," 

The immigrants of the period from 1840 to 1904 became 
sober and good citizens as soon as possible. Many became 
governors, judges and mayors, and were useful in public 
offices. About 1905 America ceased to attract the old immi- 
grant, and became the goal of a new kind, mostly well- 
intentioned but speaking every known tongue or jargon, 
crowding our cities, reading their own language papers, cut- 
ting each other's wages in the fight for existence, and present- 
ing new and serious problems to local, state and federal 
government. However, it must not be forgotten that 400,000 
of these young aliens put on the uniform of Uncle Sam and 
were willing to die for their adopted country. 

In 1921 it was admitted that the United States needed 
a breathing spell. It was argued that if immigrants were 
admitted at the rate of former years, unemployment would 
increase, cities would be overcrowded, and in every tenement 
house would "live an alien who is preaching the country's 

[28] 



Americanism and Immigration 

overthrow and handing out revolutionary literature printed 
in the language of the newly arrived." Opportunity for 
immediate gain is the goal sought by many immigrants, and 
in the present congestion of our cities that opportunity does 
not exist. Discontent is fanned into flames of revolution. 

''Why suspend immigration?" was asked in 1921. Be- 
cause we have over 12,000,000 now on hand to naturalize and 
bring into the fold. ' ' I contend, ' ' says Representative Albert 
Johnson, ''that with more than 12,000,000 unassimilated 
aliens on hand, with aliens pouring in from 50,000 to 75,000 
a month, we, the people of the United States stand a chance 
of being assimilated before we can assimilate the mass. Our 
American spiritual unity, which seemed so secure a few dec- 
ades ago, is not yet forfeited. I think it is threatened. ' ' 

So Congress passed the act of May 19, 1921 to limit the 
immigration of aliens of any nationality into the United 
States, to three per cent, of the number of foreign-born per- 
sons of such nationality resident in the United States as 
determined by the census of 1910. The first three months of 
the act of 1921 reduced the net number of new immigrants 
to 44,014. In one week only 1,500 arrived at Ellis Island, 
whereas in the corresponding week of 1920 more than 15,- 
000 arrived. In eight months under the restriction act, only 
192,000 immigrants arrived, as against 805,000 in the cor- 
responding period of 1920. The three per cent, act permitted 
the admission of 355,461 ; the census of 1920 would have in- 
creased this number to 361,652. The law has been inter- 
preted broadly to avoid injustice and inhumanity, and has 
been extended to June 30, 1924. 

In 1921 the problem was made immediately pressing 
from the fact that nearly all of central Europe seemed to be 
on the move. "If we do not suspend immigration, we must 

[29] 



Unto The Hills 

build more Ellis Island structures or open barracks,'^ says 
Representative Albert Johnson. On the other hand, Repre- 
sentative Cochran, a leader against the restriction of immi- 
gration, says : ' ' During the world war, there was practically 
no immigration. What was the result ? A grave interruption 
of industry. The great mass of active, mobile labor which 
immigration can afford, is the force on which we must depend 
if our industry is to be revived. Depression is relieved by 
increased immigration." In reply, it might be said that the 
immigration of recent years is not of the right quality. In 
the fiscal year, 1920, of the 430,000 aliens coming to this 
country, only 12,190 or 2.8 per cent, were farmers, and 15,257 
or 3.5 per cent, were farm laborers. The rest, for the most 
part, flocked to the cities. They were the "human wreckage 
of the war," largely. 

Our problem today in regard to immigration, is to pre- 
serve the true American spirit of the fathers who built this 
government and laid well the foundation of its institutions. 
We can m-ost effectively accomplish this result by closing 
the door to dangerous influences and giving us time to teach 
Americanism and loyalty to those already here. 

Against the charges that the three per cent, act is harsh, 
it is pertinent to call attention to the fact that many other 
countries have been compelled to enact strong, sharp and 
restrictive immigrant laws. Great Britain has new restric- 
tive immigration laws, and an immigrant may not enter 
Great Britain without permission, and may be deported. 
France allows aliens in transit fifteen days within her bor- 
ders, and then must move on unless they can show good reason 
for remaining. Canada has the ''money-in-pocket" law in 
addition to all her other immigration laws, which are similar 
to ours. Argentine Republic, Brazil, Australia, and other 

[30] 



Americanism and Immigration 

countries have strong laws restricting immigration, some re- 
quiring the literacy test. 

Japanese immigration presents a situation of special 
interest. Mr. V. S. McClatchy, representing the Japanese 
Exclusion League of California testified before the House 
Committee on Immigration and Naturalization in December, 
1921. He said, in substance, that in 1906, Japan made a pro- 
test against Japanese exclusion, and in 1907 secured a 
''gentleman's agreement" which was not put into operation 
until July, 1908. During that period of less than two years, 
20,000 Japanese entered California, nearly all laborers; and 
26,000 entered Hawaii. The Japanese population of con- 
tinental United States since 1906 has trebled. The Japanese 
population has quadrupled. There are 100,000 Japanese in 
California today. 

Representative Julius Kahn of California, in a speech in 
the House (page 123, Vol. 60, part 1) has outlined well the 
story of Japanese exclusion from the point of view of the 
Calif ornian. He saj^s: "In 1907 President Roosevelt under- 
took to settle the differences between our country and Japan 
by what is known as the 'gentleman's agreement.' Briefly 
stated, the purpose of that agreement is to prevent Japanese 
laborers from coming from our insular possessions to the 
mainland of the United States; and to limit materially the 
total number of Japanese laborers who might enter our ports. 
The Japanese government agreed to give no passport to Japa- 
nese laborers, except the wives, parents or children of those 
already here, to come to the mainland of the United States. 
For the first two years after the gentleman's agreement had 
gone into effect, the number of Japanese landing in the 
ports of the United States decreased materially. In 
1909 only 1,500 in round numbers, entered this country. But 

[31] 



Unto The Bills 

soon thereafter the number again began to increase enor- 
mously. The agreement was violated, in spirit, and gave 
rise to grave apprehension as to its efficacy. The * picture 
bride' incident increased the number of Japanese women 
in the United States. From the moment a Japanese lands 
in the United States he furnishes his government with in- 
formation as to the Japanese population in America. This 
confirms the charge made by Californians in the matter of 
non-assimilability. . . Are the Japanese trying to bring about 
the world-old conflict between the white races and the yellow 
and brown races? It is a question which statesmen of all 
liberty-loving, democratic nations and peoples will do well to 
study and bear in mind constantly." 

America is for Americans. Those who do not value 
American institutions and are not appreciative of American 
advantages, have no claim on the hospitality of the Nation. 
There is ample room for thrifty, upright, industrious and 
well-intentioned foreigners who desire to contribute to the 
welfare of the country. There is no room for the alien who 
is obsessed with foreign ideas and institutions, and who un- 
dertakes to foist them upon this country. 

But our danger lies not wholly at the door of the alien; 
it lies at the door of the so-called American who has lost 
his pure Americanism, and seeks to dilute his citizenship with 
so-called internationalism in the name of human brotherhood. 
We must re- Americanize many of our own citizens as well as 
Americanize the alien. If America is to be saved from the 
evil effects of foreign influence, materially and spiritually, 
both citizen and alien must be taught to lift their eyes unto 
the hills from whence cometh help. 



[32] 



CHAPTER V 

What is Sovereignty F 

A CONTRIBUTOR to a recent magazine seeks to break 
down the idea of sovereignty as a necessary adjunct 
to national safety. He argues that national sovereignty has 
steadily declined in the United States, and today is not of 
sufficient importance to deter the United States from enter- 
ing a League or Association of nations, even if sovereignty is 
surrendered. 

The writer's argument is ingenious, but neither accurate 
nor conclusive. Individual sovereignty is a part of the in- 
alienable rights of man recited in the Declaration of Inde- 
pendence — life, liberty and the pursuit of happiness; and 
by liberty is meant always liberty conscious of the rights of 
others; for rights accompanying individual sovereignty have 
corresponding individual obligations. No individual sur- 
renders sovereignty over himself, his life, his liberty and 
happiness, save for the commission of some crime. Individual 
sovereignty existed before governments or political organiza- 
tions. The latter institutions merely organized that sover- 
eignty into a social machine with many parts. Individual 
sovereignty never developed ; it existed always and is change- 
less. When we speak of sovereignty we mean power and 
authority. When we speak of liberty we mean rights. 

A trained police force is not to check those who abuse 
sovereignty, but to restrain those who abuse liberty. Indi- 
vidual sovereignty is not the right to do ''as one dadburn 
pleases," but to be master over one's self. Individual liberty 

[33] 



Unto The Hills 

is the right to act freely so long as the rights of others are 
not infringed. 

God enjoins man to society; society enjoins him to gov- 
ernment. This is the origin and development of national sov- 
ereignty. It is flippant and childish to say that ''some royal 
personage . . . discovered in the principle of national sover- 
eignty a most effective substitute for that of the individual, 
and so was able to divert the wrath of the more aggressively. 
Loving of his subjects from himself to his neighbors beyond 
the borders . . . Thus did the great and beneficial principle 
of national sovereignty become the national virtue." 

Civilization has progressed along national lines. The 
only lasting contribution of ancient empires to the world's 
progress, was their national spirit. All those empires declined 
and fell when nationalism gave way to individualism. The 
death of the Roman Empire was followed by the first attempt 
at national boundaries and the creation of modern nations. 
It was the natural social development of mankind. Moun- 
tains, rivers and lakes all formed natural boundaries, while 
language and climate seemed to indicate that the divine plan 
was separation into nations. 

While historians record in large letters the deeds of out- 
standing heroes such as Alexander, Caesar, Frederick the 
Great and Napoleon; they were not the real architects of 
civilization, nor the constructive contributors to national sov- 
ereignty. Empire builders are conquerers; and the empires 
of old were far removed from modern nations and the modern 
national spirit. 

National sovereignty, with national boundary lines, did 
not reach even an approximate stage of development until 
the middle of the seventeenth century. During the last three 
centuries national sovereignty has not declined. On the con- 

[34] 



What is Sovereignty? 

trary it has, advanced and waxed strong, until it has become 
the mainspring of human activity, the inspiration of much 
that is noblest in man. It stirs the heart of the patriot, moves 
genius to poetry and song, and creates the national soul. 

National sovereignty has not declined because of the 
' ' vicious practice of treaty-making. ' ' Nor does a treaty neces- 
sarily imply ''a surrender of national sovereignty. ' ' On the 
contrary, a treaty may (as many have) increase and extend 
national sovereignty. The treaty with France by which the 
United States acquired Louisiana; the treaty with Mexico 
whereby we acquired California ; the treaty of Paris whereby 
we acquired the Philippines and Porto Rico, all extended the 
national sovereignty of the United States. Treaties settling 
boundaries establish national sovereignty more clearly and 
more firmly. Commercial treaties do not affect sovereignty 
at all. The national sovereignty of the United States is as 
extensive, as potent, and as complete now as it has been ever. 
No part of it has been surrendered thus far. Is there danger 
of its being surrendered in part even, some time in the future ? 
"Will internationalism clip the wings of national sovereignty? 
That national spirit and national sovereignty is still the 
controlling factor in international affairs is clearly shown by 
the situation that developed at the Versailles Peace Confer- 
ence. Italy withdrew because she could not have Fiume. 
China was dissatisfied because Japan's national claims were 
granted. France refused to enter any League or Association 
that did not adequately protect her national borders and her 
life against another possible attack from Germany. Belgium 

, was dissatisfied because her national ambitions were not sat- 
isfied, because her national aspirations were not fully recog- 

I nized. Poland was disgruntled if she could not get Danzig. 

I Thus the ideals of international peace through an association 

' [35] 



Unto The Hills 

of nations gave way to national ambitions, on the very thresh- 
hold of the structure. 

Notwithstanding the bad repute into which some of the 
European diplomats fell in the first two centuries of the 
growth of national sovereignty (from 1650 to 1850), the fact 
remains that many diplomats of the nineteenth century were 
men of high character, lofty purposes and honest natures. 
America set the pace of the new diplomacy with Franklin, 
Jay, Jefferson, Monroe, Lowell and Hay in the lead. Surely 
it can not be said of these men that "the most successful 
diplomat was always the one who could lie with the straightest 
face and run the least risk 'of being caught.^' 

To treat the Federal Constitution as a *' famous treaty" 
in which ''the thirteen sovereign and independent states of 
America in 1787 . . . adopted the Constitution of the United 
States" is a gross violation of history and a mis-statement of 
facts. As a support to the idea that all treaties involve ''the 
consequent surrender of at least some measure of sover- 
eignty in every treaty," the circumstances surrounding the 
adoption of the Federal Constitution are quoted. Such 
claims are driven out of court, after examination. 

In the first place, the American colonies never enjoyed 
complete sovereignty. They were always subject to some 
common superior. First it was the King, then the Parliament 
of England, then the Revolutionary Congress. The states 
that succeeded the colonies never had complete sovereignty. 
They were subject to the superior sovereignty of the Confed- 
eration, then the Constitution. They had only qualified sov- 
ereignty as to each other. States are not sovereign and never 
have been. Neither are they nations. They are political com- 
munities, occupying separate territories, and possessing 
powers of self-government. 

[36] 



What is Sovereignty? 

The people of the several states in 1787 had no power to 
enter into a treaty. The Confederation was a social agreement 
or contract between the peoples of the different states. 
It had sovereignty but no power from the people to 
enforce that sovereignty. The Federal Constitution derived 
its sovereignty solely from the people, not the states. The 
Declaration of Independence was an act of inherent sover- 
eignty of the people. The Congresses of 1775 and 1776 
exercised the sovereign power of the people. The Fed- 
eral Constitution likewise imposed limitations ' on the 
states, but these limitations were the acts of the people in 
their sovereign power. Says one authority: ''Sovereign 
power in our government belongs to the people, and the gov- 
ernment of the United States and the governments of the 
several states are but the machinery for expounding or ex- 
pressing the will of the sovereign power." 

Thus it is seen clearly that the Federal Constitution was 
not a treaty, and by its adoption sovereignties were not ''sur- 
rendered by the wholesale." The people simply transferred 
a portion of their sovereignty to the Federal Government, 
granting specific powers to it, and limiting some of the 
powers of the states. The Federal Constitution became the 
Supreme Law, and was the expression of the sovereignty of 
the people. 

The growth of the national spirit is one of the character- 
istics of the American Republic. In this growth, the name of 
John Marshall figures most conspicuously; and to Marshall 
the nation owes the development of its national sovereignty. 
Of it he said : "It has made simpler and more natural every 
step in the development of the United States toward national 
greatness." In the famous Supreme Court case of McCulloch 
vs. Maryland, one of the earlier decisions giving form and 

[37] 



Unto The Hills 

substance to national sovereignty, Chief Justice Marshall 
said: ''The government of the Union, then, is emphatically 
and truly a government of the people. In form and sub- 
stance it emanates from them. Its powers are granted by 
them, and are to be exercised directly on them, and for their 
benefit." 

It is difficult to see how any intelligent student of eco- 
nomic 'or political history can soberly claim that the Federal 
Constitution was finally agreed to ''because the thirteen differ- 
ent states allowed their greed for gain to overcome their 
patriotism; that Washington, Hamilton, Franklin, Madison, 
Jay and Marshall joined in the agreement or 'treaty' in 
anticipation of the personal ease and comfort . . . that would 
follow such a treaty, and that such agreement involved un- 
dignified surrender of sovereign rights." 

The Federal Constitution gave the national government 
the power not only to tax but to collect; not only the form 
but the substance of sovereignty; not only authority but the 
power to enforce authority. Without such power the Con- 
stitution would have been a failure. As Washington said of 
the Confederation: "There should be somewhere a supreme 
power to regulate and govern the concerns of the confeder- 
ated Republic," The Federal Constitution was given that 
supreme power. The people who alone possess that sover- 
eignty, granted it. The people surrendered no part of their 
sovereignty. 

The British- American convention of 1817 was not a sur- 
render of any sovereignty by the United States, nor the people 
thereof. It was not ' ' an ignominious surrender to the British 
lion." Nor is it an argument in favor of naval disarmament, 
no American navy. As well might we say that because no 
policemen are needed in and about Broadway tabernacle in 

[3«] 



What is Sovereignty? 

New York City, none are needed down on the Bowery or in 
any other undesirable district. 

It is seen clearly that throughout the development of the 
national spirit and national sovereignty, the United States, 
or the people thereof, have never surrendered national sov- 
ereignty. The glory of our Republic is written in its mar- 
velous story of human uplift, national progress and spiritual 
well-being. The cynic says there has been no spiritual pro- 
gress. On the contrary, it is manifest in many ways, and con- 
spicuously evident in the sacrifices incident to the world war. 
The manhood, the wealth of the Republic, its resources, its 
opportunities, its achievements, all go back to the national 
spirit and the national sovereignty built into the structure 
by the wise fathers whose deeds live after them. 

It is no argument in favor of a League or Association of 
nations, that the United States hitherto has surrendered some 
of its sovereignty, and can do it again. The assumption is not 
true ; and the statement is an admission that such a covenant 
will surrender some of our national sovereignty. With the 
admission in mind, it behooves us to examine any proposed 
covenant and ascertain wherein the United States will, if a 
signer thereof, surrender any portion 'of its sovereignty. 

One of the main objections raised against any Inter- 
national Covenant is that it will surrender the Monroe Doc- 
trine.^ All efforts to conceal this disaster have failed thus far. 
A Paris correspondent of the New York Times, in its issue 
of April 30, 1919, said: ''It is declared that in so far as the 
Monroe Doctrine is concerned, it can not be invoked to limit 
action of an International League or Association, which has 
world-wide application." What does that mean but a subor- 
dination of the Monroe Doctrine to a League or Association of 



1 See chapter on "The Monroe Doctrine," pp. 156-164. 

[39} 



Unto The Hills 

Nations? An attempt to substitute international sovereignty 
for national sovereignty? That means a revolution of our 
form of government ; and to be legal must require an amend- 
ment of the Federal Constitution, Are the people ready for 
that? 

A radical change from nationalism to internationalism 
will mark the beginning of the breaking down of national 
boundaries, of national traditions and national aspirations. 
It will be a long step toward world democracy or international 
socialism. National sovereignty indeed, will decline. Are the 
people prepared for this ? 

From present indications, the Republic of the United 
States has reached the parting of the ways. On the one hand 
is the tried road of nationalism, with its sign posts, its warn- 
ings, its experiences, its triumphs. On the other is the un- 
known sea of internationalism, with its storms and tempests, 
its rocks and shoals. The sovereignty of the people is hanging 
in the balance. 



[40] 



CHAPTER VI 

Economic Problems 

THE economic problems of America are not profit and 
loss wholly, nor of money entirely. They are of spir- 
itual uplift, touching the hearts and souls of one hundred 
and ten million human beings. Economics are mere figures 
and formulas no longer. Numerical and algebraic signs, 
wages, exports and imports and balance of trade are mere 
symbols of the soul life behind. Interpreted properly, they 
mean a rise or fall in the level of human happiness, human 
affections and human aspirations. 

The laws of economics are no more inexorable than the 
laws of spiritual force. When we talk about the law of 
supply and demand now, we penetrate behind the scene and 
observe a corresponding law affecting spiritual life; that 
is, supply and demand mean nothing until we translate them 
into terms of permanency. Supply and demand operate 
temporarily; their effect on real life is not permanent. 
Between nations, a favorable balance of trade has no real 
significance until translated into permanent terms measured 
by soul life. To America, all economic laws are nebulous, 
until tested by the inexorable laws of American spiritual 
being; and real American life has endured because of its 
approach to the more permanent life of spiritual things, 
which never perish. 

What are America's economic problems? We answer- 
off-hand : Payment of the national debt, a balancing of 
budget, employment of our wage earners, taxes and trade. 

[41] 



Unto The Hills 

The same problems arise in other countries. But why do 
they present themselves? Because human affairs have been 
measured by the old material yard-stick and the same old 
material scales. For years, these economic problems have 
been beating against capitol hill and the great dome, amid 
a glamour of patriotism and hurricane of talk. Congress is 
confused, executives are blinded, often judges are losing 
their bearings, because all these phases of our economic 
problems are approached through some district or state, 
through politics, through a desire to be re-elected, through 
personal interest. America is worthy of better and higher 
motives, is entitled t-o a public service and a national con- 
science that visions these economic problems in terms of 
soul life, that manifests itself in better living conditions, 
more endurable existence, more sunshine and less shadow. 

The debt of the nation is colossal, due to the war and 
the extravagance of war fever, both personal and national. 
There is only one way to pay a debt, and that is by work, 
production of wealth, saving, economy and self-sacrifice. 
The national budget can be balanced only by keeping ex- 
penses within receipts. Our wage-earners can be employed 
only when confidence is restored, capital made active and 
industries set in motion. Taxes can be lowered only by re- 
ducing the public expenses. Trade, both domestic and 
foreign can be restored and maintained at a normal level 
only by increasing the purchasing power of our own peo- 
ple. Our economic relations are reciprocal among ourselves 
and with foreign countries. 

AVhile it is true that we can not sell unless we buy, like- 
wise it is equally true that we cannot buy unless we sell. 
Let us look at these questions not from a material point 
of view, but from a broad and permanent point of view, 

[42] 



Economic Problems 

eliminating everything that does not contribute to the per- 
manent well-being of the whole. Everything in a political- 
social organization we call government, is uneconomic and 
of little permanent value, that does not contribute to moral 
and spiritual advance. A debt means depression, mental 
and physical, but if it stimulates activity and thrift and 
self-sacrifice, it may contribute to the moral and spiritual 
welfare of a people or nation. A budget is justified only 
as it promotes economy and the discipline of moral law. 

Unemployment breeds discontent, and distrust encour- 
ages revolution. Since 1917 unemployment has been a can- 
cer eating into the vitals of all industrial nations. Great 
Britain has been compelled to adopt unemployment insur- 
ance or protection, to avoid what threatened to be wide- 
spread disorder. A national convention was held in Wash- 
ington not many months ago, to discuss the problem of 
unemployment and devise means of establishing a cure. 

Two programs have been offered to cure this chronic 
disease due to war conditions — one a restoration of what is 
known as an adequate protective tariff, the other an exten- 
sion of foreign trade and foreign markets. Reduction of 
unemployment is promised under either program. Since the 
peak of war and post-war prosperity, the American people 
have been divided more than ever, into two schools of eco- 
nomic thought, the one believing that, notwithstanding the 
war, industrial prosperity cannot be restored until some 
method is devised of reducing competition in the American 
markets between American and similar foreign merchandise. 
It is urged that American wage-earners are out of employ- 
ment largely because the American people cannot absorb 
between two and three billion dollars worth of foreign 
competitive merchandise in one year, and at the same time 

[43] 



Unto The Hills 

consume or even do justice to similar American merclian- 
dise. They demand adequate protection, not to increase the 
cost of living but to make living in America more endurable 
for the average wage-earner. This is a moral and spiritual 
movement, since it affects the permanent welfare of millions 
of wage-earners and tends to reduce poverty, crime and im- 
morality. It is noticeable that nearly all industrial coun- 
tries of the world have pursued this plan of home welfare 
first. Great Britain, France, Spain, Australia, Canada and 
Japan lead in this program; and is it not rather singular 
that so many Americans, looking out over the industrial 
world and viewing the present tendency of nations, fail to 
interpret it as a challenge to American nationalism, Amer- 
ican welfare and spiritual being? 

On the other hand, it is urged that the extension of our 
foreign markets, the building up of our foreign trade, even 
at the sacrifice of American markets and American indus- 
tries, is the only solution of these pressing economic prob- 
lems. It is urged that world conditions have changed, that 
we are a creditor nation, that we must buy more from abroad 
if we are to sell more. It is proposed to ** educate the peo- 
ple" into the idea that the United States is not an isolated 
country, and can not prosper unless it trades liberally with 
other countries. It is urged that the United States cannot 
collect its large debts from Europe without accepting 
European merchandise in equivalent quantities, whether 
competitive or not. 

A struggle between these two schools of economic 
thought is here; and one of the big tasks of Congress and 
the country is the adjustment of these powerful forces. The 
cause of this difference of opinion is fundamental, and lies 
in self-interest or ''the point of view." It is perfectly nat- 

[44] 



Economic Problems 

ural for any business man to pursue a policy or to urge 
legislation that will promote his own interests. The pity 
is that legislators turn their ears to a district or State, and 
do not lift their eyes to the hills. President Harding says: 
' ' Tardy as we are, it will be safer to hold our markets secure, 
and build thereon for our trade with the world. ... It is not to 
be argued that we need destroy ourselves to be helpful to 
others." These two 'opposing schools of thought hitherto, 
have found expression in the two leading political parties. 
Unless all signs fail, they have gone beyond these political 
parties, dividing both in no small measure. The abiding prin- 
ciples may Avitness a new political alignment. 

Foreign trade and commerce is an exceedingly import- 
ant department of the government; but should it be ad- 
vanced at the expense of domestic trade, commerce and 
prosperity? Obviously this increased attention to our export 
trade and to foreign markets is due to the rapid decline of 
our exports since 1921. A five-year near-monopoly of export 
trade was follov/ed by a reaction and readjustment. The 
boom of the war period reached its climax in 1920, when 
the total domestic and foreign exports of merchandise 
reached the enormous total value of $8,108,000,000 — nearly 
five times the total exports of a decade previous. The exports 
of 1921 dropped to a little over $5,500,000,000— nearly twice 
the figure of 1913-1914 before the war. 

The causes of the decline are stated to be lower prices, 
the collapse of war inflation and the decline of demand in 
Europe. Whatever the causes, there is a wide difference of 
opinion as to the remedy. On the one hand it is said that 
*'a discouraging attitude, both of ignorance and indifference, 
persists among our people. It is not realized to what a large 
extent our domestic business is dependent upon our foreign 

[45] 



Unto The Hills 

business. It is not only important from the standpoint of 
the manufacturers, but also from the viewpoint of thousands 
of American workmen who are engaged in industry and 
who have a demand for the products of the farm." On the 
other hand it is said by the farmers that "the farmers of 
the United States are convinced that their prosperity de- 
pends upon their ability to sell in the American market, 
which is their chief market. Farmers are no longer misled 
by the fiction of the international bankers and importers 
that their prosperity depends upon foreign markets which 
take less than ten per cent, of everything they produce." 

Obviously if the principle of American protection was 
sound before the world war, it is sound now. Whatever 
changes the world war may have wrought, they have not 
affected and can not affect the fundamental principle. As 
well might it be said that the world war demonstrated the 
uselessness of armies and navies and weapons of defense. 
The war did not change human nature or obviate the neces- 
sity of preparedness and national defense, both military and 
industrial. 

"While it is true that ^'no country produces all it needs 
for the comfort and well-being of its inhabitants," and ''for 
what it imports every country tries to pay for, as far as 
possible, by selling its own products abroad;" it is also 
true that every country throughout the centuries has en- 
deavored by its own genius and effort to narrow the gap 
between what it produces and what it can produce ; to min- 
imize its dependence upon any other country. Practically 
the only limitation to this persistent effort has been climate 
and natural resources. Diversification promotes national 
growth; independence promotes strength and vitality. All 

[46] 



Economic Problems 

promote the spiritual and moral side of life by making the 
struggle for existence less oppressive and submerging. 

Nor does the American principle of adequate protection 
check foreign trade. America's foreign trade grew steadily 
between 1897 and 1912 under a continuous and adequate 
protection. Foreign trade between 1914 and 1919 was abnor- 
mal, due to the world war. Its decline since 1919-1920 was 
due to readjustment and deflation; yet the volume of our 
foreign commerce is at the pre-war level approximately. 

It must not be forgotten that a nation's economic and 
industrial level is determined, not by what it sells in foreign 
markets, but by what it consumes at home. In other words, 
the consuming power of our own people measures their 
material and consequently their spiritual and moral level. 
The broader the field of competition and the larger the num- 
ber of competitive units, the lower will be the tendency of 
domestic living conditions. This is the essence of national 
protection ; and our economic problems should be approached 
by that avenue and measured by that standard. 

These opposing views constitute what might be called 
the point of divergence in Congress and among economic 
groups. Manifestly they indicate an approaching struggle 
which may determine the direction of American economic 
thought and action for many years. In this struggle is in- 
volved the whole problem of tariff and economic legislation. 
While the details may be intricate and puzzling, often lead- 
ing to confusion of thought, the underlying principles are 
clear and unmistakable. 

The problem of unemployment, of taxes, of budgets and 
economy, are wrapped up in one tremendous problem of 
national welfare. How to attain the largest degree of 
national welfare is a matter of difference of opinion 

[47] 



Unto The Hills 

altogether too often; yet the desire to reach that goal is the 
aspiration of every public official who ever sat beneath the 
dome of the capital or felt the inspiration of great souls still 
living within the halls of legislation. Statesmen of today, 
leaders of public thought, can commune with these great 
souls only by lifting their eyes unto the hills. It can be done ; 
it is entirely practical and will bring desirable results. 

What we call the American standard of living cannot 
be weighed in common scales or measured by an ordinary 
yard-stick; it is a part of life itself and manifests itself in 
human happiness, contentment, satisfaction and growth of 
soul. If these spiritual attributes are absent or submerged, 
there will be no American standard of living. The whole 
plan and structure of our scheme of government is to pro- 
mote the general welfare; and the general welfare means 
a moral and spiritual level making life more worth while. 
True Americans acquire the habit of lifting their eyes unto 
the hills. The American spirit lives in the atmosphere of 
lofty aspirations. It is America's hope. 



[48] 



CHAPTER VII 
Versailles and Internationalism 

THE Treaty of Versailles was an invitation to abandon 
nationalism and enter into the dangerous field of inter- 
nationalism. It was fortunate that the United States re- 
jected that invitation and made a separate peace with Ger- 
many and Austria. Every outstanding event of magnitude 
has demonstrated the economic and political folly of Ver- 
sailles, and the wisdom of Washington-Berlin. The economic 
consequences of Versailles constitute the riddle and puzzle 
of Europe; its political perils and almost insurmountable 
obstacles. After struggling with the problem of reparation ; 
after admitting the harsh and impossible terms of Versailles, 
the statesmen of Europe met at Genoa to readjust Europe 
and correct the blunders of 1919. It dawned upon the 
leaders of Europe that human nature had not changed much 
since its baptism of fire and blood, that human selfishness 
submerged brotherly love and European peace, that no mere 
formula or treaty or stipulation would effect a cure so long 
as men and nations groveled in the mire of political and eco- 
nomic selfishness, and refused to lift their eyes unto the 
hills. 

America rejected the Versailles Treaty primarily be- 
cause its covenant was an indirect surrender of nationalism 
and sovereignty. The struggle over the International League 
was one of the most dramatic episodes in American history. 
The result was, to the majority, a second declaration of 
independence. The political perils involved in the proposed 

[49] 



Unto The Hills 

experiment have been re-inforced in every European con- 
ference held since — at Paris, at Cannes and at Genoa. All 
of these conferences were economic ostensibly ; but economics 
were submerged in politics. Politics wrecked the Genoa 
Conference, or at least robbed it of practical results. As a 
well known observer says, the Genoa Conference was a 
clinic and not a remedy or cure. Europe can not restore 
economic safety until politics are eliminated or subordinated. 
The trouble is not "too much nationalism" but too much 
personal glorification 'on the part of many of the leaders. 
The doctors at this European clinic had their eyes on the 
voters and re-election, not on the patient or the symptoms. 

This is the trouble with too many of our own public 
servants and officials. The truth is that Europe, with its 
memories of wars and shifting boundaries and personal am- 
bitions, can not think or act in any terms but hate and 
jealousy. That is not due to an excess of, but rather a lack 
of, genuine and wholesome nationalism and patriotism. Most 
Americans concede that it was an act of wisdom for the 
United States to keep out of the political quarrels of Europe. 
The world is not ripe for an international state where all 
may live in peace and harmony and establish a heaven on 
earth. That time will not be hastened by legislation or 
human covenants; it never will come until there is a re- 
generation of the human heart and an elimination of human 
greed and selfishness. 

The late Senator Knox of Pennsylvania was one of the 
first to point out the perils of Versailles and the Covenant 
contained therein. In his illuminating speech of March 1, 
1919, in the Senate, Senator Knox said: ''It (the Covenant) 
threatens our life in respect of all those matters in which 
our sovereignty is impaired, because when sovereignty goes, 

[50] 



Versailles and Internationalism 

life as a nation goes. Independence goes when our conduct 
is dictated by others, when our continued existence depends 
upon the will of others, when we are no longer able to avail 
ourselves of our wonted means of defense, actual or by an- 
ticipation. It was Thomas Jefferson who said : 'Our first and 
fundamental maxim should be never to entangle ourselves in 
the broils of Europe; our second, never to suffer Europe to 
intermeddle with cis-Atlantic affairs.' " Furthermore the 
late Senator from Pennsylvania pointed out the economic 
hardships of the Versailles Treaty, and the peril nay the 
impossibility of attempting its enforcement. These words 
spoken in 1919 penetrated the future accurately. The harsh 
economic terms of the compact of 1918-19 have turned out 
to be one of the powerful factors retarding peace and en- 
throning hate. 

Back of this world-wide problem and its proper solution, 
is the historic attitude of America and the correct interpre- 
tation of great economic forces. For one hundred and thirty- 
three years America has been at peace with the outside 
world save on three occasions — in 1812, in 1898 and 1917. 
These three epochs are clothed with righteous defense and 
human freedom. They had back of them great ideals such 
as freedom and justice. No one of these periods save the 
last, altered in the slightest degree America's attitude to- 
ward the remainder of the world or our determination to 
stand erect and independent. This was the spiritual heri- 
tage from our fathers and mothers, unchanged by wealth, 
riches or power. 

Often it is said that the short war of 1898 for the first 
time hurled America out into space and compelled it to be 
a world power. Not so. America was a world power long 
before 1898, and made its influence felt in the capitals of 

[51] 



Unto The Hills 

the whole civilized world. Adherence to our fundamental 
ideals of independence and nationality made it possible for 
us to exercise our power and defend our rights. Until 1916 
it was a sentiment deep rooted in American life, that a nation 
must be prepared for defense, for war if need be; and that 
sentiment was a powerful contributing factor in the main- 
tenance of peace. 

Since the close of the world war, a new school of politi- 
cal and economic thought has appeared, undertaking to 
submerge our traditions and ideals on the ground, forsooth, 
that the war has altered our situation as a nation, and made 
the whole civilized world a social, political and economic 
unit. Starting with this assumption the direct conclusion 
is that America must be a part of this unit, abolish armies 
and navies, raze our forts and defenses, destroy our guns, 
remove all economic barriers or protective tariffs, and live 
as one human family under a strict application of the golden 
rule and the sermon on the mount. Nationalism, it is said, 
must give way to internationalism, the stars and stripes to 
the colors of the world covenant. A beautiful dream; but 
how impracticable and perilous ! 

What is this internationalism about which so much is 
spoken and written? It is an effort on the part of dreamers 
to establish a world government, a world brotherhood of 
man, on an ethical, political and economic foundation. It 
is said that nationalism breeds jealousy and war; that na- 
tionalism must give way if peace is to be established. Many 
attempts have been made in the world's history to establish 
peace among the nations by some human alliance or cove- 
nant. All have failed. America was at peace with the whole 
world for more than a century and a quarter, with two brief 
exceptions, yet was outside all world alliances or concerts 

[52] 



Versailles and Internationalism 

of nations.. Specific treaties and contracts of amity mark 
the boundary lines of America's political relations with the 
outside world. Until 1919, the historic injunctions of the 
fathers were preserved inviolate. 

Is America selfish and recreant when other nations of 
the world labor with potential disaster? Let our billions of 
treasure poured out as from perpetual fountains, our tens 
of thousands of young lives nobly sacrificed in a great war, 
answer. Has famine failed to appeal to us? Count the 
millions of tons of food we have sent to the starving. Have 
we been deaf to the cry of oppression? Count our young 
men in Cuba and in France. 

Is America isolated economically? Has America ever 
been isolated ? Look at the figures marking America 's steady 
increase of foreign trade and commerce during the last 
fiLfteen years. In 1898 America's total exports and imports 
were valued at $1,847,551,948. In 1912 (two years before the 
world war) America's total exports and imports were 
$3,857,587,343. From 1914 to 1918 (the war period) the 
total exports and imports increased from $4,258,504,805 to 
$8,865,366,774. This increase was due to excessive war de- 
mands. In 1920 the total exports and imports rose to $13,- 
506,497,797— a high level due to both the after effects of the 
war and the monetary inflation of prices. In 1921 the total 
value of exports and imports dropped to $6,994,000,000. Dur- 
ing the first eight months of the fiscal year ending June 30, 
1922, the total value of exports and imports of merchandise 
was $4,101,000,000.' 

Interpreted, these figures mean that after 1898 Amer- 
ica's trade with the world increased steadily and normally 



1 During the fiscal year ending June 30, 1922, the total exports and im- 
ports were valued at $6,379,000,000. 

[S3] 



Unto The Hills 

until 1912. The abnormal increase in foreign trade between 
1914 and 1920 was due entirely to the war and post-war 
conditions and to inflation of currency and consequent high 
prices in inflated currency. America's foreign commerce 
now has reached the pre-war level approximately. The level 
of the war and post-war period will not and cannot be 
reached again for many decades. However, the story of 
Ainerica's foreign trade and commerce refutes the charge 
that America is or has been isolated and that it must enter 
world economic affairs by opening the home markets more 
freely and liberally to foreign merchandise, and by relying 
upon foreign more than home markets for business. 

Again it is claimed that the debt owed the United 
States from foreign countries cannot be paid ujiless America 
opens its doors and accepts foreign goods and merchandise 
in payment of these obligations. It is estimated that durins: 
the period from 1915 to 1922, foreign loans floated in this 
country through American bankers aggregated about $5,- 
000,000,000. It is estimated that $4,000,000,000 of additional 
American capital have been invested in foreign securities 
since 1920, making a total of about $9,000,000,000. This is 
in addition to direct loans from the United States govern- 
ment to the Allies amounting (with interest) to about $11,- 
000,000,000. During this period (1915 to 1922) it is esti- 
mated that about $45,500,000,000 in American securities were 
put out by federal, state and local governments and private 
institutions. Of this amount about $16,000,000,000, it is 
estimated, went to Europe. Thus since 1915, about $36,000,- 
000,000 of American capital have been invested in foreign 
countries and securities, while only about $29,500,000,000 of 
American capital have been invested in American railroads, 
traction companies and private institutions combined. 

[54] 



Versailles and Internationalism 

Graphically stated— $36,000,000,000 to foreign countries and 
industries and $29,500,000,000 to American institutions and 
industries, or $6,500,000,000 in favor of foreign countries. 

Interpreted, these figures mean that America is not 
selfish, not isolated, but more generous to foreigners than 
to Americans. The time has come when international en- 
thusiasts must answer the question: How far can America 
export capital without seriously affecting domestic industry 
and prosperity? "Will Europe gain in the long run if Ameri- 
can resources and capital are impaired? These are some of 
the questions involved in the doctrine of economic inter- 
nationalism and the ''open door." 

The American people desire to help revive Europe indus- 
trially and economically to the utmost, consistent with Amer- 
ican welfare ; but why help foreign industries at the expense 
of American industries ? Why give employment to European 
labor while America's unemployed walk the streets and 
suffer ? 

Having demonstrated that the United States does not 
occupy a position of ''splendid isolation" so far as trade 
and commerce and humanity are concerned, the question 
arises: What are our principal exports? Cotton unmanu- 
factured, led the list in 1920 and also in 1921, comprising 
about 12 per cent. Next comes wheat comprising about 9 
or 10 per cent. Then follows coal constituting about 4 or 5 
per cent. Then come coke, wheat flour, lard, illuminating 
oil, corn, lubricating oil, copper, automobiles and tobacco. 
The greatest decrease in exports from 1920 to 1921 occurred 
in manufacture3 for further use in manufacturing, the drop 
being more than 58 per cent. In exports, agricultural and 
food products lead, with metals and metal products, textiles, 
chemicals and tobacco following in order. Great Britain and 

[55] 



Unto The Hills 

Canada are our two best foreign markets, Germany, Japan, 
France, Mexico, and Italy following in order. Germany 
occupied seventh place in 1920, and third place in 1921, — 
so far as our customers are concerned. 

Imports decreased 40 per cent in 1921 as compared with 
1920, amounting to $3,654,000,000 in 1921.' Our chief im- 
ports are — raw silk constituting IOV2 per cent ; cane sugar be- 
tween 9 and 10 per cent ; coffee between 5 and 6 per cent ; hides 
and skins, crude petroleum, wool, tobacco, lumber and wheat. 
By industries, imports ranked in this order in 1921: Food 
and kindred products, textiles, chemicals, metals and leather. 
While values declined, quantities increased in many cases. 
Our chief sources of imports are : Canada, Japan, Cuba, Great 
Britain, France, Mexico, China and Germany, in the order 
named. 

The relative importance of domestic and foreign com- 
merce has a powerful bearing on the relative importance of 
legislation to promote domestic or foreign trade. According 
to official figures in 1912 slightly more than 64 per cent of our 
cotton was exported, 12.8 per cent of our wheat, 1.67 per 
cent of our corn, and 4 per cent of our bituminous coal. In 
1919, a little more than 56 per cent of our cotton, 31 per 
cent of our wheat, and less than one per cent of our coal 
was exported. The census of 1920 shows that the percentage 
of exports of total domestic production ranges from 59.3 in 
the case of motor-cycles, 58 per cent in the case of cotton, 
and 53 per cent in the case of rice down to 6-lOths of one 
per cent in the case of corn. Only 231/2 per cent of our 
wheat and 14.7 per cent of our iron and steel products, 5 
per cent of -our lumber and 20 per cent of our refined sugar, 



1 In 1922 (fiscal vear) total imports of merchandise were valued at 
J2, 608, 000,000. 

[56] 



Versailles and Internationalism 

was exported in 1920, according to the last census. Inter- 
preted, these figures mean that outside of a very few special 
articles of domestic production, the great market for Amer- 
ican products is in the United States, that is, the home 
market. 

Foreign trade is desirable, important, yea essential; but 
it is a mistake to promote foreign trade at the sacrifice of 
domestic trade, to broaden foreign markets by opening the 
home markets to unfair competition. Does America's indus- 
trial prosperity depend more upon foreign rehabilitation 
than upon domestic recovery? Must America invest more 
billions in European securities, neglect its own industrial 
interests and open wide the door of America's markets to 
Europe and other foreign countries? If this is the sort of 
internationalism desired, it is easy to see the end of the 
road for America, economically and industrially. 



[57] 



CHAPTER VIII 
A Creditor Nation and Liquidation 

A FISCAL program can not be determined by the phrase 
''creditor nation" or "debtor nation," for the reason 
that those phrases are not positive and definite. A nation can 
not be a creditor nation" or a "debtor nation" wholly for the 
same reason that an individual can not be a creditor or debtor 
wholly. The "creditor nation" theory is invented by those 
opposed to what is known as the American principle of pro- 
tection. It is a variation of the ancient and long-exploded 
theory that trade between nations is nothing but barter. 

From the figures covering the total credit and debit 
transactions of the United States between July 1, 1914, and 
July 1, 1920, six fiscal years, the United States was a creditor 
nation to the extent of about $8,000,000,000 — nominally. 
But a creditor nation to whom ? A creditor to the rest of the 
world. Yet during these six years, this country was a credi- 
tor nation to Europe and North America only, but a debtor 
nation to South America, Asia-Oceanaca and Africa, if by 
"creditor nation" is meant an excess of exports over imports. 
The United States experienced an excess of exports over im- 
ports every year from 1874 to 1920, with the exception of 
1875, 1888 and 1889 ; nevertheless it was a creditor nation to 
some nations only, a debtor nation to others. 

From the books of the United States Treasury under 
date of September 1921, we learn that under the Liberty 
Bond acts, the advances to foreign governments up to June 
23, 1921 were $9,597,518,741. Of this amount, Great Britain 

[5«] 



A Creditor Nation and Liquidation 

is charged with $4,277,000,000; France with $2,997,477,800; 
and Italy with $1,648,034,050. Interest charges amount to 
$922,550,143, increased somewhat since June, 1921. The total 
advances including interest are about $11,000,000,000. It 
appears that representatives of the Wilson administration 
tacitly agreed to postpone payment of the interest charges 
for a period until the debt could be refunded. The Harding 
administration has secured the creation of a liquidating debt 
commission with power to refund the debts due this country/ 

There are two features of the foreign debt adjustment or 
liquidation problem — one the refunding into obligations more 
desirable than sight "I. 0. U.'s," the 'other the time and 
manner of collecting the debt. The former is a mere matter 
of administration; the latter touches the entire fiscal and 
commercial program of the United States, the tariff, and 
trade with foreign countries. 

Nearly all the advances made by the United States dur- 
ing the war, were credits for American merchandise bought 
and paid for by the United States government, and shipped 
abroad. The money remained in the United States, to a 
very large degree, and gave rise to the ''war prosperity," fic- 
titious in a large degree and mischievous in a larger degree. 
From its consequences we are suffering industrially and finan- 
cially. 

These advances were loans from the American people to 
the American government, later spent by the government for 
munitions of war, supplies, food etc., to be sent abroad. These 
transactions constituted the great bulk of the ''marvelous 



1 The Foreign Debt Funding Commission, created in December, 1921, is 
authorized to fund the foreign war debt due the United States into obligations 
which must mature not later than June 15, 1947; and bearing interest not less 
than five per cent. No part of either principal or interest can be canceled. The 
bonds of one government can not be accepted in payment of the debts of another 
government. The authority of the Commission expires in 1925. 

[59] 



Unto The Hills 

increase in our exports" from 1914 to 1918. To the 
milli'ons advanced by the government were added some $9,- 
000,000,000 in the shape of private credits and private invest- 
ments in European securities between the armistice and 1922. 

The American government assumed $11,000,000,000 ow- 
ing to the American people, and gave the people government 
bonds therefor. American manufacturers of munitions and 
other articles, and growers of and speculators in food, received 
the bulk of the funds. In reality, this debt, whatever it may 
be, is owing to the millions of subscribers of Liberty and 
Victory bonds and other government obligations. The gov- 
ernment acted as the fiscal agent of these people who ad- 
vanced their past savings or pledged their future savings 
to loan the Allies. If the government refunds, it refunds for 
the holders of Liberty and Victory bonds. The vital ques- 
tion is this — What effect will a collection of the debts from 
Europe have upon (1) the holders of Liberty and Victory 
bonds, (2) the commerce of the country, (3) the industries 
and wage-earners -of America. 

The value of Liberty bonds depends entirely upon the 
solvency of the Treasury — its ability to tax sufficiently and 
wisely to meet all Treasury obligations and all government 
expenses. The ability of the government to raise revenue 
depends upon the ability of the American people and Amer- 
ican industries to pay. Depressed industries, idle factories 
and mills, and unemployed people can not pay income or 
other taxes. 

It is argued that the only way Europe can pay its debts 
is by shipments of merchandise — manufactured goods mostly 
— into the United States, whether competitive or not. If the 
debt Europe owes the United States is to be paid thus, every 
Liberty bond will be depressed and every citizen, man or 

[60] 



A Creditor Nation and Liquidation 

woman, who bought ''until it hurt/' will feel the hurt in a 
larger degree. Collection of debts in this manner will cripple 
the United States to an alarming degree, perhaps beyond 
recovery. 

Every effort is now being made to hold up our foreign 
trade to the war level. Obviously this can not be done, is not 
being done ; for that level was reached by exports bought on 
credit and in stress of war. It was abnormal, fictitious, and 
due largely to the excessive demand of Europe for munitions, 
war supplies and food. From 1914 to 1918 our exports were 
a iDositive menace, for they were based on war-destruction. 
The country suffered from excessive exports bought on credit ; 
it is suffering today, and facing a serious problem in the 
adjustment of these exports. 

This forced exportation has demoralized trade and the 
rate of exchange, and compelled Europe to pursue a financial 
policy resulting in currency depreciation and loss in inter- 
national trade. Europe borrowed on a scale of monetary- 
standard reasonably near par. She can not pay on a mone- 
tary standard depreciated from 75 to 90 per cent., without 
still further exhausting herself and lowering her purchasing 
power still more. If the United States should force payment 
with the dollars of the purchasing power of 1914 to 1916 and 
1917, Europe would lose heavily, since a dollar of 1914 pos- 
sessed many times the purchasing power of the dollar of 1922. 
Furthermore, such a procedure would depress foreign ex- 
change still more ; exports would depress foreign exchange still 
further and would decline correspondingly. 

Our export trade to Europe in the future must depend 
upon Europe's ability to restore its credit, to deflate its cur- 
rency and buy more normally. To demand billions of Europe or 
admit billions of dollars in European merchandise, in payment 

[6i] 



Unto The Hills 

of debts would not only cripple Europe, but cripple the 
United States also. Should Europe sell to the United States 
some $20,000,000,000 worth of merchandise to settle debts due 
this government and private investors in European securities, 
Europe would have little wealth to restore her credit cur- 
rency equilibrium, or to sell to other countries for cash. 
Obviously this would tend to lower our exports to Europe. 

How would this method of collecting European debts 
affect American industries? Right here readjustment or liq- 
uidation of European debts to the United States have a se- 
rious bearing on the fiscal and tariff program of the United 
States. If the debts can not be collected except by importing 
goods and merchandise from the debtor countries, the result 
will be disastrous to American industry. Great Britain and 
France are facing the same problem in their efforts to collect 
reparation from Germany. Germany shipped large quan- 
tities of coal to Great Britain and closed the British mines, 
bringing misery and want to the English miners. German 
manufactured goods have been accepted by Great Britain in 
part liquidation of the reparation debt, to the everlasting 
injury of England's industries and industrial population. 
France has suffered from the "reparation" payment of 
Germany in goods, most of them competitive. France has 
been compelled to take steps to stop the invasion. 

What will be the fate of industrial America if debts 
amounting to $8,000,000,000 due from Great Britain, France 
and Italy alone, are collected by importing goods and mer- 
chandise from those countries to that amount? Eleven bil- 
lion dollars worth of European merchandise flooding the 
American markets would paralyze our domestic industries, 
increase unemployment, reduce the ability of American wage- 
earners and institutions to pay taxes, threaten the Treasury 

[62J 



A Creditor Nation and Liquidation 

with bankruptcy and finally destroy our ability to produce 
for either domestic or foreign consumption. 

It is impossible for the American people to import and 
consume imported merchandise in sufficient quantities to 
settle European debts due this country, and at the same time 
consume a like quantity -of similar American goods and mer- 
chandise. America can not manufacture and produce what 
it needs, and at the same time consume an equal amount of 
competitive goods and merchandise. Such a program of 
liquidation would ruin the foreign commerce of America, 
close its mills and factories, and reduce America to economic 
and industrial serfdom. 

A balance of trade against a nation is no explanation of 
its adverse rate of exchange in international trade. England's 
pound sterling has been and is below par (in American 
money) not because England buys from more than she sells 
to America, but because England's volume 'of credit money 
far outstripped its production of wealth. It is the same with 
France, Belgium, and more so in the case of Germany and 
Austria. A turn of international trade to the credit instead 
of the debit side of the ledger will not restore the rate of 
exchange unless accompanied by a deflation of credit currency 
and a corresponding increase in the production of wealth. 

It is claimed by some that larger imports from Europe 
will remedy the unfavorable rate of exchange; that a more 
even trade balance will restore normal conditions. For many 
years prior to the world war, our balance of trade with 
Europe was against Europe, yet the rate of exchange did not 
vary much. If an adverse balance of trade affects rate of 
exchange, the pound sterling and the French franc, long 
before the war, should have declined steadily as measured in 
American dollars. For many years before the war, Canada 's 

[^3] 



Unto The Hills 

balance of trade with the United States was against Canada, 
yet the Canadian dollar did not depreciate as it depreciated 
in 1915-1916. This demonstrates that international trade has 
nothing to do with the rate of exchange, and the United States 
can not aid in restoring the rate of exchange with England or 
any other European country, by buying more English goods 
and merchandise. 

It is said that business and trade in America is dependent 
on the settlement of the reparation question in Europe and 
the settlement of the European debts to America. Is it not 
more dependent on the settlement of industrial problems here 
at home? The value of Liberty and Victory bonds depends 
upon the power of the wage-earners, industrial institutions 
and all corporations to pay large taxes. Idle men and women, 
closed factories, and railways with deficits in operation, can 
not contribute to the volume of government receipts. 

The safet}^ of the American Republic lies in the continued 
employment of wage-earners both on the farm and in the 
factory. The extent of our foreign commerce depends upon 
our own production of wealth. 

The European debt owing the United States was one of 
America's contributions to the winning of the world war. 
Final agreement as to the size of the debt, its form and its 
ultimate payment, should be contingent upon the welfare of 
the United States, its great industries and its millions of 
wage-earners. 



[64] 



CHAPTER IX 

The Phiijppines 

WHAT is the problem of the Philippine Islands ? What 
is the background? What are the essential elements 
and the respective claims? What bearing has the solution of 
this problem on the future of the United States ? 

Ever}^ one knows that the Philippines came into the pos- 
session of the United States as the result of the war to free 
Cuba from Spanish rule. With no primary intention of our 
own, war forced us into the geography of the far east, precipi- 
tated up'on us a semi-colonial government and gave us a prob- 
lem new and serious. Dewey's guns in Manila bay echoed in 
every state of the Union and made our pulses beat faster. 
The treaty of Paris closed the episode; and nearly eight 
million people, living on the largest of the group of 3,000 
islands, comprising a total area -of 115,026 miles, came undei 
the United States government and the American flag. That 
was in 1898. 

It is well known that many of our leading statesmen 
opposed keeping these islands, since they might be a great 
political and economic burden. Others, of more or less emo- 
tional nature, argued that "the flag should never come down 
whence one hoisted aloft." As time went on, public opinion 
divided and crept into politics. The presidental campaign of 
1900 was fought out somewhat on the question of so-called 
"imperialism," or a colonial form of government. The election 
of that year fixed the future policy of the government toward 

[65] 



Unto The Hills 

the Philippines for sixteen years at least ; and the last months 
of 1900 and the first months of 1901 saw the United States 
firmly established there. As if reading the future and mani- 
festly doubtful as to what policy would be best, President 
McKinley, while the ink on the Paris treaty was hardly dry, 
announced that ''the Philippines are ours not to exploit, but 
to develop, to civilize, to educate, to train in the science of 
self-government. This is the path which we must follow or 
be recreant to a mighty trust committed to us." 

The first period of American occupancy was from August 
1898 to July 1901. A military governor administered law 
under the "War Department. The conspicuous act was the 
suppression of an insurrection under Aguinaldo. A begin- 
ning was made in schools, in public health measures and 
public works. The second period was from July 1901 t-o 
October 1907, when the islands were governed by the Philip- 
pine Commission appointed by the President. 

During this period Governors Taft and Wright wrought 
their wonderful work in establishing order, a judicial system 
and a currency system. The third period was between 1907 
and 1918, when one-half of the legislative power (the lower 
house) was turned over to a body of elected Filipinos, known 
as the Philippine assembly, the commission being the upper 
house or senate. During this period a broad program of 
public works was laid down, railroads built, steamship lines 
put into operation and a university established. In 1918 
about 72 per cent of the people employed in the public service 
was composed of Filipinos. 

During the fourth period (from 1914 to 1921) the Fili- 
pinos were given a majority of the upper house, and Congress 
passed what is known as the Jones law of August 1916. Under 
it the Christian and civilized provinces were permitted to 

[66] 



The Philippines 

elect a senate and a house, and the governor-general author- 
ized to appoint representatives for the non-Christian portions 
of the islands, the legislature having legislative control over 
the whole archipelago. As a result, in 1921 only about four 
per cent of the people in the public service were Americans. 

The so-called J'ones law of 1916 contained this signifi- 
cant sentence: ''Whereas it is, as it has always been, the pur- 
pose 'of the people of the United States to withdraw their 
sovereignty over the Philippine Islands and to recognize their 
independence as soon as a stable government can be estab- 
lished therein," etc. It will be recalled that Senator Clarke 
•of Arkansas offered an amendment conferring complete and 
unqualified independence upon the Philippines in not less 
than two years and not more than four years from the date 
of the approval of the act. 

A great political battle waged in the House around this 
amendment, which was rejected finally. In his address as 
permanent chairman of the Republican National convention 
in Chicago, June 8, 1916, Senator Harding (now President 
Harding) referred to the Clarke amendment as an effort of 
the administration (the "Wilson administration) *Ho renounce 
its guardianship of a race of people, and leave them to walk 
alone when they had not been taught fully to creep." He 
objected to "hauling down the flag." For six years the blood- 
less battle between the friends of Philippine independence and 
continued American control has been waging, with no result 
as yet. 

Since 1916 the Filipino people have progressed marvel- 
ously. The enrollment in the public schools is now 945,000, 
and the private schools 75,000 ; banks, railroads, hospitals and 
improved public roads have been built until it is conceded 
that the twenty-three years of American occupation is 

[67] 



Unto The Hills 

extraordinar3^ In March 1921, Isauro Gabaldon, resident com- 
missioner from the Philippine Islands to the United States, 
paid a tribute to America and Americans, He said: ''Amer- 
ica has truly treated the Filipino people as no other nation 
has ever treated an alien race in all the history of the ages. 

America's work in the Philippines in the interest of 

hygiene and public health is also monumental In a 

sentence, you have shown us hovf to make our country a better 

place to live in The Filipino people have a stable 

government today. It is anchored on the enduring bedrock 
of constitutional government — public opinion/' 

Since 1919 there has been established in Washington a 
ptess bureau promoting the cause of independence for the 
Philippine islands. A delegation of prominent Filipinos re- 
cently in the United States to labor for independence, brings 
the problem immediately before Congress and the American 
people. It is one of America's big problems. What will be 
the solution? It seems to hinge on the interpretation of the 
phrase "stable government" in the Jones law. 

Have the Philippine islands a "stable government T* 
On the one hand. Former Resident Commissioner Gabaldon 
says it has. Resident Commissioner DeVeyra says : * ' For five 
years we have been practically independent." Manuel L. 
Quezon, president of the Philippine senate says: "For five 
years the government of the Philippines has been, in prac- 
tically all respects, native. There has been established in 
the Philippines a stable government of and by the Filipinos. ' ' 
Sergio Osmena, speaker of the Philippine house of representa- 
tives, says: "In asking for the establishment of a stable 
government. Congress did not mean that we should really 
have a stable government, because such a government has been 
in existence in the Philippines since American occupation of 

[68] 



The Philippines 

the islands; but to improve on the old one, to extend the 
powers already conferred upon the Filipinos." 

This is one side of the shield. What is the other? March 
20, 1921, President Harding addressed a letter to the Secre- 
tary of War, notifying him of the appointment of a com- 
mission, headed by General Leonard Wood and W. Cameron 
Forbes, to go to the Philippine islands to study the situation 
and ascertain if the Filipinos really have a ''stable govern- 
ment." The Secretary of War gave instructions to the com- 
mission, reciting the claims of both sides and adding, ''be- 
tween these conflicting views you are to render judgment." 

This commission has made its report. Here are the essen- 
tial points : ' ' The great bulk of the Christian Filipinos have 
a very natural desire for independence ; most of them desire 
independence under the protection of the United States; a 
very small percentage desire immediate independnce, with 
separation from the United States; a very substantial element 
is opposed to independence, especially at this time. The 
Moros are a unit against independence and are united for 
continuance of American control, and, in case of separation 
of the Philippines from the United States, desire their portion 
of the islands to be retained as American territory, under 
American control. They want peace and security. These the 
Americans have given them. 

"The Americans in the islands are practically a unit 
for the continuance of American control. We find there is 
a disquieting lack of confidence in the administration of jus- 
tice, to an extent which constitutes a menace to the stability 
of the government. We find that the people are not organ- 
ized economically nor from the standpoint of national defense 
to maintain an independent government. 

"We feel that with all their many excellent qualities, 

[69] 



Unto The Hills 

the experience of the past eight years, during which they 
have had practical autonomy, has not been such as to justify 
the people of the United States relinquishing supervision of 
the government of the Philippine islands, withdrawing their 
army and navy, and leaving the islands a prey to any power- 
ful nation coveting their rich soil and potential commercial 
advantages. 

*'In conclusion, we are convinced that it would be a 
betrayal of the Filipino people, a misfortune to the American 
people, a distinct step backward in the path of progress, and 
a discreditable neglect 'of our national duty, were we to with- 
draw from the islands and terminate our relationship there 
without giving the Filipinos the best chance possible to have 
an orderly and permanently stable government." 

What is the solution of the Philippine problem? What 
will Congress do when the question of Philippine indepen- 
dence comes to the front again ? On the one hand is the tacit 
pledge of the United States to give the Filipinos indepen- 
dence. On the other hand is the conflicting testimony as to 
whether the Filipinos have a stable government and are ca- 
pable of self-government. Will Congress take the evidence of 
the Filipinos themselves who are contending for independence, 
or the testimony of the Harding commission? Will the fun- 
damental interpretation of the mission of the United States 
enter the problem and influence Congressional action? Will 
the doctrine of self-determination be potent? Will so-called 
imperialism be an issue again ? These are interesting queries 
requiring more than ordinary wisdom and more than human 
aid, to answer correctly. 

It is claimed by some that the recently confirmed four- 
power treaty may have an important bearing on the question 
of Philippine independence. It is even said that this treaty 

[70] 



The Philippines 

may result in America's surrendering her Pacific possessions, 
perhaps altogether. If so, this may hasten Philippine inde- 
pendence. An active campaign has been inaugurated already, 
based on this hypothesis. It is argued that the four-power 
pact will protect the Philippines whether they are a part of 
the United States or not, and that there will be no further 
need of American protection. 

In the event of the latter development, the United States 
may return soon to its former status before the war with 
Spain. Then may come a separation of the United States 
from any colonial policy whatever, called by some "the white 
man's burden." On the other hand, projection of the United 
States into world affairs may induce Congress to hold the 
Philippine islands for the welfare not only of the Filipinos, 
but the United States. 

This is a problem of serious proportions. Which way 
shall America's course be directed? Shall America let the 
Philippines go or hold on to them ? The problem must be met 
and solved soon. In its correct solution is involved the future 
welfare of the Republic. In it is involved the matter of arma- 
ment and preparation for defense. It is hardly conceivable 
that the United States will be able forever to rely upon mere 
treaties and diplomatic agreements to protect outlying pos- 
sessions, and to promote world trade and commerce in the 
face of keen competition. Will not the time come, if we 
adhere to the policy of colonial possessions, when disarmament 
will be perilous? Can the United States be a world power 
with far-distant possessions, and reduce its army to a mini- 
mum and scrap its nav}^? 



[71] 



CHAPTER X 

Gold Standard and Foreign Exchange 

'^Xj^INANCE can not and should not be disassociated from 
X; commerce, from which it sprang," says a critic of the 
gold standard and modern bankers. True; not only finance 
but the establishment of the gold standard sprang from com- 
merce. Gold was selected as the world's monetary unit before 
nations and empires legalized it. It has stood the test of time 
and experience, and will remain as the standard until some- 
thing better is offered. 

"Bankers have made of finance a world apart, in that 
they deal in money and credit as values in themselves ; values 
separate and distinct from their function of medium of ex- 
change," repeats the critic. Bankers have done nothing of 
the sort. The world of trade and commerce has made gold 
the corner stone of finance, since a monetary unit must be 
not only a medium of exchange but a measure of value by 
which we ascertain price. Any system of finance must have 
a starting point or unit; and because finance deals with 
relative values, the unit must possess value in itself. It can 
not be a mere idea, a mental fancy. Finance deals with ma- 
terial things; and the instruments of finance must be meas- 
ured by a unit possessing value in itself. This is why money, 
either in the form of gold, or credit money in the form of 
silver or paper bills of exchange or checks, is bought or sold 
like any other commodity. All represent capital, and facili- 
tate the movement of capital. Viewed in this light, gold or 

[72] 



Gold Standard and Foreign Exchange 

credit in. its various forms, constitute an essential element in 
the production of more capital or wealth. 

''The bankers ride commerce as they please/' says the 
critic. Nothing of the sort. The banker facilitates savings 
and the accumulation of capital, and helps to substitute mod- 
ern commerce for ancient barter. The world's vast business 
could not be conducted without the modern system of banks 
and bank credit; yet the bankers would starve without com- 
merce. Commerce makes banks and bankers possible. The 
machinery of a locom'otive is useless without the steam or the 
electricity to set in motion. Commerce is the steam or elec- 
tricity; the machinery is the banker and the credit system. 
It is absurd to say that government is at the mercy of bankers. 
On the contrary, every bank in the country, outside of a few 
private institutions, is regulated, examined and largely con- 
trolled by either state or federal government. 

It is argued that the United States has three billion 
dollars of the world's gold, and that ''the chances are that 
gold can not be obtained in exchange for some form of 
credit money," therefore the gold standard is a myth. Not 
so. The gold standard does not mean a gold dollar for every 
dollar of token or credit m-oney. It simply means that a cer- 
tain number 'of grains of gold is a dollar, and all kinds of 
coin or paper instruments used as money, are measured by or 
referred to this unit. Or, to put it another way, all silver or 
paper money issued is kept at precisely the same purchasing 
power level as the purchasing power level of the gold unit or 
gold dollar. And as a matter of fact, gold in moderate quan- 
tities can be obtained by any depositor in any Reserve bank 
or trust company or savings bank. 

"Finance adjusts the price of service and commodities," 
says the critic and reformer. It does nothing of the sort, 

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Unto The Hills 

if by ''finance" is meant bankers. Bankers can not adjust 
prices. What nonsense to say that the bankers adjusted and 
fixed prices, the level of wages and the high cost of living, 
during the world war! And yet this is the statement of the 
finance reformer of the 1922 variety. 

The government has not "lost its inalienable right to 
govern and regulate the flow of m'oney as a unit of measure. ' ' 
The government possesses just as much of that right as it ever 
did. If it did not exercise the power to regulate and limit 
the flow of money, there would now be a flood of irredeemable 
paper money as worthless as the German marks or Russian 
rubles. Liberty bonds were, and Treasury certificates are 
now, equally available for purchase by a private citizen, firm 
or business corporation, as by a bank. Banks simply facili- 
tate the sale of these securities, since banks have more capital 
for investment than has a private individual; yet the bank's 
money belongs to private individuals largely, the bank being 
the custodian. During the world war, the government turned 
to the banks for assistance, just as it turned to big industrial 
institutions for assistance. The government could not create 
capital 'or wealth by printing paper notes, any more than 
it could manufacture automobiles or munitions of war by act 
of Congress. 

Was gold unnecessary and useless during the world war ? 
Is it useless today? It is asserted that ''gold is acting as an 
international medium of value in contravention to the very 
principles upon which it is suffered to be based. As a result 
of this conflict, gold is no longer a commercial lubricant but 
a brake which has virtually locked the wheels of international 
business. Today there is no demand for gold. The world 
does not want it. ' ' 

In other words, it is asserted that because the United 

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Gold Standard and Foreign Exchange 

States has about one-third of the world's stock of gold, other 
nations have discarded the gold standard, and do not want 
gold. On the contrary, the paper nations of Europe are 
struggling to secure enough credit and enough gold to get 
back on their economic and financial feet. G^old flowed to 
this country to pay for war materials and food and clothing. 
Europe wants more capital from the United States, and it 
makes no difference whether it is gold or raw materials ; both 
are capital. Furtherm-ore, every dollar asked for will be 
equivalent to gold. A demand for capital is a demand for 
gold or its equivalent, since all American capital is on the 
gold basis. 

Economists are not mystified by the ''ease with which 
certain bankrupt Europeans are doing business. They are 
functioning on a basis of their own paper currency." 
Germany is near an economic abyss, and the world knows it. 
Already Germany is asking for an international loan, on a 
gold basis. It is impossible for any nation to prosper per- 
manently by attempting to create capital and pay its debts 
by issuing irredeemable pieces of paper called money. Ap- 
parent prosperity exists within the confines of that country, 
but the end will come soon, unless the printing of paper 
money is stopped. The gold standard is not responsible for 
such an economic condition ; but rather a violation of economic 
and financial laws which proclaim that a monetary unit of 
measure facilitating the creation and transfer of capital must 
have real and approximately stable value in itself. 

This leads to a brief discussion of finance and commerce, 
and international trade. It is charged that the balance of 
trade in commodities, between the United States and Euro- 
pean countries, is so much against Europe as to force gold to 

[75] 



U7tto The Hills 

the United States and practically demonetize gold in Europe, 
thus stopping international trade. 

Precisely the same principles apply to international trade 
as to domestic trade. In both, barter has given way to instru- 
ments of credit, which speed up business and economize time 
and capital. An excess of exports over imports under all 
conditions, is not followed by a gold settlement unless it is 
cheaper to ship gold than to buy exchange. What is inter- 
national exchange ? It is a modern system by which traders 
of different nations discharge their debts to one another. It 
is no longer a simple shipment of gold to cover the excess of 
imports. During and since the world war, gold accumulated 
in the United States because the rate of exchange between 
European countries and the United States has been disturbed 
by inflation of currency and cheap paper money. 

The ''rate of exchange" means the relative value, for 
example, -of an American gold dollar and an English pound 
or a German mark, or a French franc. A bill of exchange is 
a simple order from A (the shipper) to B (the banker) to pay 
C (the purchaser in England or elsewhere) a certain sum of 
money. It is a transfer of credit, just as an ordinary draft 
or check is a transfer of credit in domestic trade. 

When there are more sellers in New York (for example) 
than buyers, there is an excess demand for bills of exchange, 
and the rate or charge goes up. If there is an excess of goods 
bought over goods sold, the demand for bills of exchange goes 
down. This is simply the operation of the law of supply and 
demand. The rate of exchange goes to a point where it is 
cheaper to ship gold. Because of the great volume of irre- 
deemable paper currency in some countries, the currency of 
those countries dropped in value as compared with the 
American gold dollar, and the rate of exchange or cost of 

[76] 



Gold Standard and Foreign Exchange 

a bill of exchange in foreign money went up — in some coun- 
tries out of sight. Shipments of gold followed, as the only 
way to pay for American goods. The machinery of exchange 
was out of commission, due to a departure from the inter- 
national gold standard. 

There can be no permanent and reliable commerce be- 
tween nations under modern methods, unless there is an inter- 
national fixed unit of measure, possessing approximately un- 
varying value in itself. The entire machinery of foreign 
trade — bills of exchange, commercial bills, bankers' bills of 
exchange and cable transfers — is founded on the hypothesis 
that the international unit of measure is fixed approximately. 
Bills drawn on countries having irredeemable paper currency 
are venturesome and uncertain. That is why American ex- 
porters are shy about shipping to some countries, and why 
American investors are shy about investing in the securities 
of some foreign countries. Just now, everything is out of 
joint. Already the United States government and private 
parties and concerns, have invested about $20,000,000,000 in 
Europe, all on the accepted gold basis. It was American 
capital, the savings of the American people, on a gold basis. 
Whatever portion of this amount it paid back, should be paid 
back on the gold basis. It would be better for the United 
States to forgive the entire debt than to permit payments of 
money or capital to be made on a depreciated paper currency 
basis. The United States did not lend inflated values to 
Europe; it lent capital in the form of munitions, food and 
clothing, all at par of exchange, which was the gold basis. 

It is argued that loans (in commodities) to Europe were 
made at par of exchange, therefore it is unjust to collect the 
debts on that basis. This is another illustration of the danger 
of irredeemable currency and a departure from the fixed 

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Unto The Hills 

international monetary measure. Collection of the American 
debt on the basis of depreciated foreign currency and high 
exchange, would cheat the American creditors and place a 
premium on repudiation and cheap paper currency. Further- 
more, such a procedure would hasten economic disaster in the 
debtor nation. If Germany or any other European country 
whose *' exchange" is suffering from depreciated currency, 
desires to have its exchange restored and its economic trade 
relations with other countries resumed on a normal level, there 
must be a cessation of printing press money and a slow but 
steady return to a gold standard basis. Normal foreign trade 
between the United States and Germany or between the 
United States and any other country now on a variable and 
irredeemable paper currency, is impossible, under any other 
conditions than those stated above. A departure from the 
gold unit and another experiment with irredeemable paper 
money by the United States, would bring suffering and misery 
to the American people, and destroy what foreign trade there 
is. 

It is charged that the international bankers depressed 
foreign exchange and scaled down European money as com- 
pared with the American dollar. They did nothing of the 
sort. These foreign units of measure, in gold, were scaled 
down because of vast volumes of government paper credit 
money, all irredeemable. International bankers could not 
have maintained the normal levels of foreign m^onetary units 
had they so desired. True, there has been speculation in 
foreign currency; but the probability is that the losses have 
been greater than the gains. 

It is claimed that America can not sell commodities to 
Europe because a somewhat indistinct power ''decrees that 
no such exchange shall take place without gold." There is 

[78] 



Gold Standard and Foreign Exchange 

nothing in the world to prevent an exchange of American 
goods for foreign goods, provided the American wants to sell 
or exchange. The only thing retarding such a procedure is 
the lack 'of European credit, due to irredeemable paper cur- 
rency or paper money. 

Gold is not at a premium in the United States. It is at 
a premium in some European countries for the same reason 
that it was at a premium in the United States after the Civil 
War — too much paper credit money. Wheat and cotton have 
been "at a discount" and low in price, because -of the loss 
of foreign credit, and the decline in the purchasing power of 
the people, not only in Europe but also in the United States. 
The price of wheat and cotton (in paper dollars) soared be- 
tween 1915 and 1918, yet gold did not go to a premium. 

Gold is subject to the law of supply and demand as a 
commodity; but it so happens that measuring time by long 
periods, it is seen that the world's supply has approximately 
kept up with the demand. It is the least variable of all com- 
modities, hence the best standard or unit of measure. Some 
parts 'of Europe are without gold temporarily, in their domes- 
tic affairs ; but they can not be restored to pre-war conditions 
in their international trade until they stop the issue of irre- 
deemable paper currency, and get back to a gold basis. When 
the rate of exchange between the United States and European 
countries is restored to normal, trade with these countries will 
be resumed. Deflation of paper currency and a pledge to 
get back to the pre-war gold standard will do more than any- 
thing else to restore credit in Germany and other nearly 
bankrupt nations. 

For nations to change the rate of exchange to fit existing 
conditions, would be to indorse repudiation, and place an 
undue burden on the millions of Americans who parted with 

[79] 



Unto The Bills 

their capital on a certain basis, and expect a return on the 
same basis. Such an alteration in exchange practically would 
establish an irredeemable currency basis in the United States. 

Discussion -of foreign exchange and foreign trade brings 
us right back to the fundamental proposition of all trade, 
domestic or foreign^— the necessity of having an approxi- 
mately fixed unit of monetary measure. All the processes of 
business, of trade and commerce, revolve around this one 
absolute necessity. Foreign exchange facilitates rapid and 
safe transfer of credits and settlement of international busi- 
ness. Importers and exporters are not compelled to collect 
or pay bills through dealers in foreign exchange. They can 
ship the gold -or buy foreign money, or merely exchange goods ; 
but they find that bills of exchange are safer and cheaper in 
the end, and save time. So long as these transactions all go 
back to pre-war normal relations between the United States 
standard unit, the gold dollar, and European units meas- 
ured in those dollars or the gold bullion, there is no cessation 
or interruption of business. 

America's foreign trade, her exports to Europe, will not 
be restored to normal until some means have been found to 
re-establish the credit of European countries by a return to 
the gold standard. Irredeemable paper currency based on 
''the demands of the people" or on ''prospective crops" or 
"human energy," destroys credit and interrupts trade and 
commerce. 

Fundamentaly gold acts as a sort of arbiter of the rela- 
tions of the other comm^odities with one another in the inter- 
national market. The exchange market tends constantly to 
overcome movements away from this equilibrium and to give 
a uniform value to gold in all markets. 

A well-known economist sa>s: "Manifestly unfavorable 

[80] 



Gold Standard and Foreign Exchange 

results to e:5^change arise from defects in tlie currency system 
of a country ; for such defects do not usually carry their own 
cure by correction of exchange until a country has parted 
with all its standard money and severed its monetary system 
from the regulating influence 'of the interplay of supply and 
demand for gold throughout the world." This is precisely 
what has taken place in Germany and some other countries. 



[8i] 



CHAPTER XI 

Fatal Effects of Europe's Currency 

NO BETTER object lesson could be offered in answer to 
the pleas of tbe 1922 financial reformers in favor of 
government paper money based on "faith and credit" and 
issued in any volume to ''meet the public demand," than 
the situation in Europe today. Obviously almost all the 
whole economic and financial system of continental Europe 
has broken down, and that part of the world is on the 
verge of collapse. The huge debts of these countries and 
peoples, measured either in gold or in depreciated paper is 
taxing the skill and ingenuity of economists, financiers 
and premiers, until the peril of peace appears to be even 
greater than the peril of war. In words familiarly Ameri- 
can, it is a condition not a theory that confronts Europe. 

Nor is the impending disaster confined to Europe; it 
affects the whole civilized world, more or less. Its con- 
sequences are seen in the decline of the foreign trade of the 
United States, in continued unemployment, and the slow 
recovery of industrial America from the depressing condi- 
tions of 1920 and 1921. What is the remedy? 

The ''rate of exchange" between any two countries, 
for example the United States and France or Germany, is 
to exchange and international trade what a barometer is to 
the weather. The barometer does not make the weather fair 
or stormy ; it is the prevailing weather that manifests itself 
in the barometer indications. The barometer indication is 
the result not the cause. So the rate of exchange is the 

[82] 



Fatal Effects of Europe^ s Currency 

result not the cause, of international economic conditions. 
The cure must be applied, not to the rate of exchange, but 
to the causes back of the exchange. To do away with 
exchange will not touch the cause. The cause, in this 
instance, is the fiat paper currency in the countries of 
continental Europe, issued in such vast quantities as to make 
much of it worthless. 

In discussing the economic effect of this depreciation 
of European currency and the consequent decline in the 
exchange value of European paper money, two factors must 
be kept in mind; first the domestic purchasing power of 
those currencies in the countries of issue, second the ex- 
change value of those same currencies in world trade and 
commerce. For example, broadly speaking, the German 
mark today has about two or three times the purchasing 
power in Germany that it has in the markets of England 
or the United States. This leads to the superficial conclu- 
sion that Germany's system 'of depreciated paper currency 
is sound, as far as Germany is concerned, and that Germany 
is prosperous within itself, on a depreciated and irredeem- 
able paper currency. But neither Germany nor any other 
civilized country can for any long period of time, live 
entirely within itself, pay its debts and resume its place 
among nations, with only a vast volume of irredeemable 
paper money back of its trade, commerce and obligations. 
No nation ever has done it; no nation ever will do it. The 
real test comes when a depreciated currency nation deals 
with countries on a sound financial basis. Sooner or later the 
sound currency nations will cease to trade with the depreci- 
ated currency nations, because the latter will lose their credit. 
It is precisely the same in dealings between individuals. A 
will trade with B and sell B goods on credit, just so long as 

[83] 



Unto The Hills 

B's credit is good. But let B issue a large number of notes 
(and irredeemable paper currencies are nothing but notes) 
and the time will come surely when A will give B credit no 
longer. If Germany continues to do business by issuing 
more irredeemable government notes or paper money, the 
time will come when her credit with other nations will be 
gone. The fact that German marks will buy m-ore in Ger- 
many than in other countries, does not alter the situation. 
It requires more day's work and more hours of labor in 
Germany to buy a meal or a suit of clothes than in England 
or the United States. Depreciated currency degrades labor 
because it depresses the value of human energy and increases 
the real cost of production when measured in daily toil. 

But neither Germany nor any other depreciated cur- 
rency country can do without trade with other countries, 
forever. Nor can it purchase in other countries without 
credit ; and that credit must be based on the world standard. 
Ordinarily, international prices adjust themselves on a gold 
basis, and are measured in the international units. It is 
significant that when prices in Germany (for example) are 
measured in depreciated marks, the international value 
(in exchange) of the mark drops in about the same propor- 
tion as the price advances in paper marks. The same thing 
is true in France as to francs, or any other European country 
having a depreciated currency. 

What is the effect on the United States of depreciated 
currency in Europe and the inevitable disturbance of nor- 
mal exchange? Temporarily^, depreciated currency coun- 
tries have an advantage over the United States (and over 
England) in the markets of the world. Germany and 
Prance can produce competitive goods cheaper than either 
Great Britain or the United States. Hence imports from 

[84] 



Fatal Effects of Europe's Currency 

Germany or France into Great Britain or the United States 
are stimulated. The money cost of production in France 
or Germany is lower than the money cost of production 
in Great Britain or the United States. Marks will buy 
more in Germany, and francs will buy more in France, 
than in the United States, consequently there is an ab- 
normal profit in the importation of German or French 
competitive goods into Great Britain or the United States. 
Herein lies the need of special tariff legislation to meet the 
unusual situation. 

Conversely, this same situation tends to check the ex- 
portation of American merchandise into depreciated cur- 
rency countries. It takes so many more marks or francs 
to buy a certain amount of merchandise in the United States 
than in Germany or France, that exports of American goods 
to those countries are curtailed. Examination of the figures 
of our foreign commerce for 1920 and 1921, demonstrates 
the truth of this assertion : 

Exports to Europe Imports from Europe 

1919 $5,187,666,363 $750,528,389 

1920 4,466,090,927 1,227,842,745 

1921 3,408,522,000 937,868,864 

1922 2,067,027,605 830,473,712 

Much of the decline in imports (measured in dollars) was 
due to the deflation of the American dollar, into which foreign 
invoices of imported merchandise are converted. Also the 
decline in exports was due to currency inflation, somewhat. 
The volume of imports did not decline as much as the volume 
of exports. 

In the words of the United States section of the 

[85] 



Unto The Hills 

inter- American high commission, January 22, 1922 : ' ' Confu- 
sion in the existing exchange situation shows itself principally 
in two ways: first, in the relative premiums and discounts 
on the currencies of different countries; and, second, in the 
disastrous daily fluctuations of the currencies of the same 
countries. The export trade of countries whose currencies 
are at a premium is at a serious disadvantage. The trade 
of the United States is suffering more from this derange- 
ment than any other country, because its currrency is at a 
premium with respect to practically every other country. 
It is to be expected that in the course of time, price levels 
and wage levels will rise in countries with depreciated 
currency, and will decline in countries with premium curren- 
cies, until an economic equilibrium is once more reached. 
Meanwhile, however, while changes in the relative premium 
and discount on currencies are going -on, the process is 
causing incalculable inconvenience and serious injury — 
economically, financially and socially — both to the premium 
and discount countries." 

These are some of the consequences and perils of a 
depreciated currency based wholly on ''faith and credit" 
or on ''future human energy" or "human desire." 

The time has come when Europe must approach and 
undertake to cure the financial and economic disease al- 
ready advanced to a dangerous, if not a fatal stage. The 
Genoa conference was planned to accomplish this purpose. 
Lloyd George outlined a program at the Cannes convention. 
This program had three outstanding principles : first, finan- 
cial assistance to trade with Kussia must be predicated upon 
an acceptable assurance that the rights and property of 
investors shall be respected; second, that propaganda in 
Russia and elsewhere against capitalism and private prop- 

[86] 



Fatal Effects of Europe* s Currency 

erty must cease ; third, an adequate means of exchange must 
be available, and generally there must be co-financial and 
currency conditions which offer sufficient security for trade. 

The last implies that the Genoa conference must deter- 
mine upon some formula whereby the obstacles to inter- 
national trade raised by depreciated and fluctuating cur- 
rencies, may somehow be done away with. This is an admis- 
sion that the issue by governments of irredeemable paper 
currency, in quantities to meet public demand, is perilous 
to and destructive of, international trade, because it is a 
complete departure from the rate of exchange or the gold 
relation betw^een the standard units of monetary measure 
established by custom, finally by law. If two or three 
European nations can work this havoc, through such a pro- 
cedure, it is not difficult to picture the havoc and misery that 
might be wrought should the United States plunge into a 
reckless orgy of irredeemable paper money. 

In a recent address Lloyd George said: ''Before trade 
can be fully restored, you must have established everywhere 
convertibility of liquid assets lodged in banks of a country 
maintaining a free gold market. That will involve a re- 
valuation of currency. The world can not afford to wait 
until currency is restored to par. What matters is stabiliza- 
tion at a figure that can be maintained and which will there- 
fore constitute a reliable basis of international commerce.'* 
The premier said that budgets must be balanced, and that 
further issues of paper currency would result in new debase- 
ment. 

The central thought of this declaration of purpose, is 
the restoration of the gold standard. Lloyd George says it 
must be through revaluation of European currency. In 
other words there must be a scaling down of the vast sums 

[87] 



Unto The Hills 

of paper currency to something like gold values. Can this 
be done without wholesale repudiation? Does this involve a 
scaling down of the large sums borrowed from the United 
States by the several nations of Europe? Does it involve a 
scaling down of the $11,000,000,000 due the United States 
from Europe to perhaps $5,000,000,000? Does it mean that 
Great Britain will scale down the debt due her from France, 
and that France will scale down the debt due her from 
Russia, and that the paper marks and paper rubles now in 
circulation, will be scaled down to something like a parity 
with real capital and wealth in those countries? If this 
seems to be the only feasible plan, it should be observed, 
however, that the sole object is to restore those countries to 
a gold standard. 

The United States was vitally interested in the Genoa 
conference, yet acted wisely in refusing to take part offi- 
cially. It was interested because the central problem, 
apparently, was the economic restoration of Europe. The 
United States stands ready to help even more than it has 
already, when Europe manifests a disposition to help itself. 
If there is a plan on foot for the governments of Europe to 
repudiate their debts for the economic and trade benefit 
of one or two, the United States might protest more readily 
without than within a European conference. The United 
States desires foreign exchange to be restored to par, and 
its foreign trade maintained. The way to attain that result 
is to help Europe regain its credit by insisting on balancing 
budgets and re-establishing the gold standard. 

It is said that America 's need is ' ' a money that will flow, 
a money that will release the pent-up energies and the 
natural forces which are waiting to remove our depression 
and fill the land with prosperity." Germany and Russia 

[88] 



Fatal Effects of Europe^ s Currency 

have ''money that will flow" — flow until it is diluted to the 
point of worthlessness. Will irredeemable currency ''release 
the pent-up human energies and the natural forces ? ' ' By no 
means. It is capital that "releases the pent-up human ener- 
gies and the natural forces," not m-oney. Often the greater 
the volume of money, the more difficult it is to release the 
pent-up energies and natural forces. Money does not tie up 
energies; it helps capital produce more capital, unless it is 
depreciated and irredeemable. 

All commercial nations agree that government should 
issue currency through private sources, called banks of 
issue. The government should not be in the banking busi- 
ness, should not go into the loaning or discounting business 
as a permanent policy. In the last analysis, the United 
States had no business to loan European countries vast sums 
of money. War was the only excuse. If the government is 
to go into the banking business, why not have it go into 
the automobile or the woolen manufacturing business? 
There is just as much reason and sense. 

The national banking system supplemented by the 
Federal Reserve system, performs an important function in 
the business world. Under government control, it mobilizes 
capital and promotes saving and the accumulation of more 
capital through activity and investment. Capital is savings ; 
and savings reinvested, is entitled to a fair rate of interest 
or return. A non-interest bearing currency issued by the 
government and based on water power or human energy, 
would depreciate soon. Government notes based only on 
agricultural products or human needs or mere promises 
would be hazardous indeed. 

If the United States wishes to restore domestic pros- 
perity, reduce unemployment and revive international trade, 

D89] 



Unto The Hills 

it must avoid any sort of a new-fangled cheap money adven- 
ture. Such a proceeding would bring down the pillars of 
the temple, the K-epublic, on the unhappy heads of the 
people, and complete a ruin all sane folks would avoid. The 
road to normal international conditions is paved with a 
currency based on a gold unit of measure, not on paper 
measured by natural power, human energy, farm products 
or prospective profits. The world wants stability, not an 
uncertain and vanishing unit. 



|y»l 



CHAPTER XII 

Economics of Peace with Germany 

WHATEVER opinion may be entertained as to the 
metbod pursued to establish final peace with Germany, 
ratification of a separate treaty with that country (as well as 
with Austria and Hungary) put an end to an anomalous con- 
dition and closed a stormy chapter of turmoil and terror. 
Acceptance of these treaties was gratifying to all nations 
concerned, and a distinct triumph for the diplomacy of the 
administration. 

The long, bitter struggle over the Versailles treaty is a 
matter of history now. It involved the whole civilized world, 
made and unmade statesmen and leaders, well-nigh wrecked 
the careers -of some of the actors, caused political havoc in 
party elections and involved nations in turmoil. Historians 
will pronounce the building of the Versailles treaty and its 
final rejection by the Senate, one of the most thrilling and 
heart-breaking periods in American annals. 

The great war was not only a ghastly waste -of men but 
a colossal economic waste. Primarily, the war was economic. 
It was a struggle whose roots were hidden in the humiliation 
of France in 1870-71, and even back of that in an imperial 
ambition to control the commerce of the world. It has been 
said by one writer that Germany was like a caged monster 
struggling for more room, more expansion, more breathing 
places. There was an economic madness. 

Hence the economic clauses of the Treaty of Versailles 

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Unto The Hills 

seem to be the most important. Part X contains the economic 
clauses, yet the ''German rights and interest" recited in 
part IV are essentially economic, for they touch the entire 
colonial system -of the former empire, upon which much of 
her over-seas commerce and shipping depends. 

Under the terms of the Versailles contract, not only did 
the United States become the owner in fee as a tenant in com- 
mon of European territory and a trustee as to other territory, 
for which Germany was paid nothing, nor given credit in 
reparation, but a co-receiver for all imperial state property. 
Under this treaty Germany ceded her overseas posses- 
sions in fee simple to the allies and associated powers (in- 
cluding the United States) who did not assume the debts, 
and who took all the property without any compensation 
whatever running to Germany, either for the territory ceded 
or for actual property taken. 

The United States became a tenant in common, with 
Great Britain and other associated countries, of German 
African possessions, with an area of a million square miles 
(one third the acreage of the United States) and a native pop- 
ulation 'of 11,500,000; likewise a tenant in common of 
Germany's Pacific possessions. 

Germany ceded without compensation of any sort or 
description, her extra-territorial rights in northern Africa, 
Samoa and in China, the latter ' ' free and clear of all charges 
and encumbrances." 

In short, Germany was closed out in all the world, ap- 
parently, without a penny's compensation. She lost her outlet 
for her increasing population and found her territory in 
Europe restricted. Germany ceded all her merchant ships, 
1,600 tons gross and upwards, to the allies and associated 
powers, including one half of her thirty-two auxiliary cruisers, 

[92] 



Economics of Peace With Germany 

one-half of her ships between 1,000 tons and 1,600 tons gross, 
one quarter of her fishing boats. Thus she was stripped of all 
means of carrying on her commerce. 

Furthermore, Germany was compelled to construct, in 
her own ship-yards, a maximum of 200,000 tons of ship- 
ping each year for five years, the reparation commission 
to determine the specifications and the terms. Also Ger- 
many was forced to restore all allied river boats for inland 
navigation, and to cede a portion of her own fleet. Further- 
more, Germany waived all claims for damage to German 
ships. 

Germany agreed within three years to deliver to 
France and Belgium 40,000 horses, 184,000 cattle, 121,000 
sheep, and a large number of other animals; also large 
quantities of machinery and tools. To France, Belgium and 
Italy, Germany agreed to deliver betw^een 32,000,000 and 
35,000,000 tons of coal annually for five years, and 25,000,000 
tons for five years after. All the railroads and equipment 
in the German territory ceded to the allies, were seized 
without compensation. 

Germany was compelled to agree to make compensation 
for all damages done to civilian population of the allied 
and associated powers, and to their property. Germany's 
investment in allied and associated countries, and held in 
Germany, were wiped out. All other German property in 
allied or associated territory might be retained and 
liquidated by the powers. This applied to all ceded terri- 
tory. Germany agreed to compensate nationals of all 
allied and associated powers for losses to property in Ger- 
man territory, and to compensate for all property rights 
or interest taken by the allied and associated powers from 
German neutrals. 

[93] 



Unto The Hills 

The treaty terminated all commercial treaties except 
those named and accepted by the allies, stopped Germany 
from making trade agreements, turned her coast-wise trade 
over to all the world, and prevented higher duties than 
those prevailing July 31, 1914. Germany waived all claims 
for internment of her nationals and her ships. 

Such are the leading economic features of a treaty 
which the world in its calmer moments realizes is harsh 
and cruel. Yea, more; it is disastrous to the whole world. 
British ship yards were idle because of the over-supply of 
ships built in German yards and delivered to Great Britain. 
British coal miners suffered because Germany sent millions 
of tons of coal to the British Isles, also France and Belgium. 
French and Belgium industries suffered because Germany 
was forced to pay a large part of her indemnity in manu- 
factured goods. 

The struggle between Great Britain, France and Ger- 
many over the fixing of the amount of reparation, the 
politics mixed in that struggle, the threats used, is a matter 
of history. Again the economic problem faced Europe. 
Not infrequently the question was raised by British econo- 
mists: How long can Germany stand it? How long can 
Great Britain and Europe stand it? Germany paid the 
expenses or was charged with the expenses of the armies 
of occupation, in addition to carrying her other burdens. 
She could not perform financial and economic miracles. 
Her effort to perform the task drained her gold reserve, 
and forced the issue of immense volumes of paper money, 
long after the close of the war, until the paper mark was 
worth not much more than the paper on which it was 
printed. Stripped of much of her economic machinery to 
produce, deprived of her colonies, relying on the printing 

[94] 



Economics of Peace With Germany 

press for, money, Germany is in the hands of a receiver, 
already. 

The congressional joint resolution declaring an end of 
war, approved by the President July 2, 1921, expressly 
reserved to the United States and its nationals ''any and 
all right to enforce the same," to which the United States 
is entitled. The terms of the separate treaty specifically 
retains in the United States all alien property seized. 

In considering the economics of peace with Germany, 
it is well to remember this vital distinction between the 
Versailles treaty and the Berlin-Washington treaty. The 
former imposes certain obligations upon Germany which 
finally the allies agreed could not be performed. The latter 
concedes to the United States the right to determine what 
the United States shall exact from Germany and how it 
shall be exacted. It is significant that article II of the 
separate treaty with Germany recites "with a view to 
defining more particularly the obligations of Germany . . . 
with respect to certain provisions of the treaty of Ver- 
sailles," it is understood, etc. In other words, the United 
States would seem to open the way to deal with Germany 
about as it pleases, under the several parts of the Versailles 
treaty recited in the separate treaty. This might give the 
United States the right to handle the economic questions 
with due regard to the interests of all concerned, including 
the United States. 

After much haggling, the ultimatum to Germany was: 
The payment of 132,000,000,000 in gold marks, less (1) 
bonds to the amount of 50,000,000,000 gold marks (2) pay- 
ment of 2,000,000,000 gold marks annually and 26 per cent, 
of the value of her exports and (3) payment of 1,000,000,000 
gold marks within twenty-five days. Germany appealed to 

[95] 



Unto The Hills 

the United States without avail, and in the end was forecd 
to accept the terms. 

The separate treaty with Germany specifies the sections 
of the Versailles treaty under which the United States 
expressly reserves its ''rights, privileges, indemnities, 
reparations and advantages." In other words, the United 
States refused to be bound by or to become a party to, the 
harsh terms of the Versailles treaty, and elected to accept 
or reject its economic rights which existed under the terms 
of the armistice, and which were recited and reaffirmed in 
the Versailles document. One of these rights was the right 
to sit in the reparation commission if it was deemed best. 
The reparation commission is a sort of receivership, an 
arbiter of Germany's economic life, whose decrees Germany 
agreed to carry out and enforce. 

The principal allies in Europe have discovered that the 
economic burdens heaped upon Germany have been of 
doubtful benefit to them. The terms of reparation were an 
option on German commodities, and the enforcement of the 
option has caused the principal allies to pause and examine 
the situation. In the winter of 1921-22, British ship yards 
were idle, while German ship yards were busy. German 
workmen were employed building ships for England, Ger- 
many paying her labor in paper marks. British coal ex- 
ports fell off, since France, Belgium and Italy obtained coal 
from Germany. Great Britain was at a disadvantage. 
Repairs on machinery set up by Germany in the devastated 
territory, went to Germany. Germany successfully invited 
investment of foreign capital in her enterprises, to the 
chagrin of the allies. What promised to be an economic 
restoration for the allies turned out to be a peril. Even on 

[96] 



Economics of Peace With Germany 

an irredeemable paper currency, Germany enjoyed temporary 
prosperity — temporary only. 

Germany paid the first billion gold marks, but it drove 
the paper mark down to less than 'one cent in gold. This 
made the world economic problem all the more acute, for it 
invited increased exports from Germany to competing 
countries, at a low cost of production. The direct result in 
Great Britain was the enactment of the ''safeguarding of 
industries act of 1921. ' ' France, Belgium and other European 
countries have been forced to adopt a similar course. 

These events suggest an economic peril to the United 
States lurking in the attempt to enforce the terms of the 
Versailles treaty. Great Britain's experience may well be 
a suggestive warning. The United States is vitally con- 
cerned in trade and commerce with Germany. If the pay- 
ment of the American claims against Germany involves the 
acceptance of manufactured goods and merchandise to the 
injury of American industries, the economic problem is 
serious. Or, can the United States afford to receive large 
quantities of competitive goods from Germany, pay for 
them in cash and have these funds turned over to the repara- 
tion commission? Already increasing imports from Ger- 
many furnish a problem for the United States to solve. 
Imports from Germany for the last three calendar years 
were : 1919, $944,981 ; 1920, $45,085,975 ; 1921, $90,773,756. 

Germany is in a strong position economically, however 
weak she may be financiall}^. Paper marks temporarily, are 
solving Germany's economic and financial problems at the 
expense of other countries, giving her a tremendous advan- 
tage; but they are slowly bleeding Germany to death. Ger- 
many can not exist on paper money, and the allied problem 
is robbing Germany of her gold. If Germany is reduced to 

[97] 



Unto The Hills 

economic helplessness, what will be the effect on the rest of 
Europe and the United States? A crash is inevitable unless 
the allied and associated nations lend a helping hand. The 
whole world will feel the shock. 

Germanj^ is underbidding the world in the production of 
many staple articles, because she pays her labor in paper 
marks, often resulting in wages less than fifty cents per day. 
Does it not seem wise and logical for the United States to 
refuse to fan the flames of economic peril which may consume 
the rest of the world, including the United States? Will not 
an unwise course postpone a return to industrial prosperity 
and increase unemployment? 



[98] 



CHAPTER XIII 

Causes of the Agricultural Crisis 

UNDER the title ''Farmers are serfs of the money 
lenders" and the "only relief in sight is a possible 
chance to borrow even more cash," a contributor to a weekly 
publication paints a picture of the decline of American 
agriculture, "the large and useless expenditure of money," 
the increase in farm mortgages, and the small profits of 
farmers, resulting in "farm serfdom." The conclusion 
reached by the writer is that the farmers of the country, 
because of wrong governmental policy, are in the grip of the 
money lenders. He calls for a "face about policy under a 
dynamic, constructive leadership." 

It is true that since the Department 'of Agriculture was 
created in 1862, appropriations for that department have in- 
creased from $600,000 to more than $33,000,000. It is true 
that 48 states appropriated some $32,000,000 for the benefit 
of agriculture. But does it follow that these expenditures 
for agriculture have been useless because they have "failed to 
stem its downward trend ? ' ' Says the writer of this article : 
"And so through the years, these bureaus and departments 
have multiplied, developing into a super-government, to which 
political parties in power have gradually come to delegate 
their prerogatives, receiving in return therefor governmental 
patronage. This super-government has supplanted real de- 
mocracy." This is a strong indictment against the Depart- 
ment of Agriculture and its bureaus; but is it true? Has it 

[99] 



Unto The Hills 

anjd^hing to do with the status of the farmers and the remedy 
for their present condition? 

The fundamental fault with the picture drawn by the 
writer of the article, is that he employs a microscope instead 
•of a telescope in examining the situation. He sees the im- 
mediate, present difficulties and wrongs, and fails to take a 
wide perspective view over a long period of years. When we 
view the history of American agriculture for, say sixty years 
since the Department of Agriculture was created, there is 
presented a marvelous development, a wonderful growth. 
Sixty years ago, there was no such thing known as scientific 
farming, rotation of crops or scientific use of fertilizers, or 
remedies for many ravishing diseases of the crops. In 1862 
there were about 2,000,000 farms valued (with property) at 
$8,000,000,000. In 1920 there were 5,800,000 farms valued 
(with property) at $50,000,000,000. The total wealth pro- 
duced by the American farms in 1862 was about $1,000,000,000 
annually, and about $8,700,000,000 in 1920. So that when 
we take a view of agriculture through a good-sized telescope, 
and get our eyes fixed on the hills, we see a marvelous pano- 
rama of fields of wheat, corn, 'oats and barley ; herds of cattle, 
flocks of sheep and many horses. The wealth of the Indies 
was nothing compared with the agricultural wealth of America 
from 1862 to 1920. The decline was after the world war. 

Early in 1921, Congress created a joint commission of 
agricultural inquiry to examine into the condition of agri- 
culture, the causes of the decline, and the remedies. In its 
report this commission says: ''A constructive and general 
program of permanent agricultural development can not be 
predicated upon the abnormal phenomena of a period of 
expansion or depression. It must proceed from a considera- 

[lOO] 



I 



•m 



■ I 



\ 



'■i 



^' " l\ * / 




Causes of the Agricultural Crisis 

tion of the cause of agriculture over a long period of develop- 
ment, in order that the wisdom of experience and a consider- 
ation of the organized knowledge of agriculture may be the 
guide and director of future development. ' ' In other words, 
no single isolated period, but a long period of time, must be 
taken in examining cause and effect of great economic forces. 

Discussing the depression of 1920-21 this commission 
says: '' Business cycles of alternating great prosperity and 
succeeding great depression, have occurred in a more or less 
regular way among all modern highly organized nations. . . . 
Rarely has a cycle swept through all its familiar features 
more swiftly and dramatically than that which followed the 
close of the great war. The most distant nations were equally 
involved, and most of them followed through the successive 
phases in almost identical times. In the United States every 
industry and every class of people were involved in the ava- 
lanche of descending prices. The turn in the tide of optimism, 
expansion, speculation and extravagance to reaction of defla- 
tion and depression, occurred about the middle of 1920, and 
at about the time when the grain crop of the United States 
was beginning to go on the market." In other words, the 
depression was world-wide, and not confined to agriculture 
or the United States. The avalanche of declining prices 
involved the whole world. It embraced all countries and all 
industries. 

While the income and reward of capital invested and 
labor emploj^ed in agriculture increased over a long period of 
years prior to the world war, as compared with other indus- 
tries, yet between 1919 and 1921 they were far below the 
rewards of other industries. Measured by the standard of 
purchasing power of his products by the absolute prices of 
farm products as compared with the prices of other 

[lOl] 



Unto The Hills 

commodities, by the test of quantity production or the test of 
income or rewards for capital invested and labor employed, 
agriculture in 1920 and 1921 was relatively worse off than 
other industries. 

Was the decline of agricultural prices in the crop year 
1920-21 induced by overproduction in 1920 ? The production 
of grain in 1920 was greater than in any year since 1915, but 
less than 1906, 1912 or 1915; yet the greater production in 
these three years did not produce anything like the same 
decline in prices that took place in 1920. It can not be said 
that overproduction was the essential factor in the decline 
of prices. 

Was the decline due to loss of markets abroad? On the 
whole, exports of grain in 1920-21 were greatly in excess of 
exp'orts in the period between 1909 and 1913. On the whole, 
agricultural production in the United States has barely kept 
pace with demand, so that a collapse of consuming power of the 
American people or the people abroad can not account wholly 
for the decline in prices. 

In the last ten years farm mortgages have increased; 
farm tenancy has increased. During the period of price 
decline, the wholesale prices of other commodities lagged 
behind the prices of farm products, and retail prices lagged 
behind wholesale prices. 

The joint commission of agricultural inquiry recom- 
mends: legalizing cooperative combination of farmers for 
marketing their products; a better credit system for the 
farmers similar to the federal reserve system with long periods 
for rediscounting ; a warehouse system; reduction of freight 
rates ; agricultural attaches in foreign countries ; better grad- 
ing of products ; better system of cost production ; reduction 
of the hazards of climate; better terminal facilities; better 

[102] 



Causes of the Agricultural Crisis 

roads; better prices through the play of econ-omic forces, 
not through legislation. 

''A careful investigation of the economic conditions of 
the farmer," says the commission, "leads to the conclusion 
that the exodus from the farm to the city has been in a large 
measure due to the great economic rewards offered by urban 
employment than is offered for the risk, management and 
labor on the farm, and the greater income for capital invested 
in industry as compared with the income of capital invested in 
agriculture. 

Undoubtedly the debacle of prices in 1920 and 1921 re- 
duced the farmer to a condition worse than he has suffered 
for thirt}^ years. Farmers have had the greatest difficulty 
in paying the debts incurred in producing the crops of 1920 
and in securing credit necessary for new production. Yet, in 
discussing the prices -of farm products, as well as the prices 
of everything else, it must be borne in mind that the world 
war and war inflation of currency boosted prices. The pur- 
chasing power of the farmer's dollar was cut in two. What 
he sold brought double price in inflated dollars; but it re- 
quired twice as many dollars to buy a suit of clothes or a 
carriage in 1917-18 as it did in 1912-13. However, a bushel 
of wheat in 1917-18 purchased no more than a bushel pur- 
chased in 1912-13. Prices in inflated dollars were high, and 
demand boosted them still higher. When the purchasing 
power of the dollar began to be restored to normal because of 
deflation (or reduction) of credit currency, the price of wheat 
and all farm products declined. Had the price of all other 
articles declined in the same proportion and at the same 
speed, the farmers would have been just as well off as before. 
A so-called 50-cent dollar is of no advantage if prices advance 
in the same proportion. 

[103] 



Unto The Hills 

Inflation of prices does not increase values; it simply 
deceives the public. The farmers (and others) in 1917-18 
were deceived. They thought $2 wheat meant a doubling of 
values. It meant nothing of the sort. The unit of measure 
(the paper dollar then) was temporarily cut in two. This 
is the mischievous result of inflation or too much paper or 
credit money, always. Farmers and wage-earners are the 
first to be deceived and to be hit by a program of cheap or 
fiat money. They look at the doubling of prices and a doub- 
ling of wages they receive, but fail to look at the other side 
of the shield where it is revealed that there is a corresponding 
doubling in the prices of everything they buy. 

It must be perfectly obvious that thus far in this dis- 
cussion of agricultural conditions, the banker or money lender 
has not entered. The only factors have been (1) supply and 
demand, (2) a war, (3) inflation of prices and inevitable 
decline. During 1921 there was a marked advance in the 
prices of farm products. This was the result of natural eco- 
nomic law. But this increase in the price of farm products 
will not save all who were nearly swamped in the collapse of 
1919-20. Doubtless many banks and many money-lenders lost 
large sums in this same collapse. It was the result of too 
much speculation, too much gambling, due to the flush of war 
and high prices. 

Farmers must have fair prices and fair profits. But 
what are fair prices and fair profits ? Surely the people have 
had enough of governmental regulation of prices and profits. 
There is only one way to determine fair prices and fair prof- 
its, and that is by the economic rule of supply and demand. 
To this, in the case of farmers, may be added co-operative 
associations and better methods of distribution. But after all, 
prices of wheat and corn as well as of boots and shoes or 

[104] 



Causes of the Agricultural Crisis 

blankets, a,re governed by supply and demand. Here the 
banker or the money lender does not enter. 

Yet banks and money lenders are a part of the business 
of agriculture and stock-raising, also of manufacturing. They 
are essential and beneficial. They assist in marketing and 
carrying crops and cattle ; they are a boon to business men. 
It is not the fault of a banker or a money lender that the 
borrower is unable to meet his obligations. It is not the fault 
•of the owner of a farm mortgage that the farmer is unable 
to pay. The same rule applies to farmers as to all other busi- 
ness men — they need credit, and frequently borrow money 
or rather capital. The money or capital borrowed are the 
savings of other farmers and business men. Banks and money 
lenders have no bearing whatever -on the price of wheat, corn, 
cattle, produce or fruit in the orchards. If farmers are 
** serfs of the money lenders," they assumed that unenviable 
position voluntarily ; and the only way to get out of the serf- 
dom is to pay the debts. If farm debts were incurred in flush 
and speculative periods, and the ''boom busted," why blame 
the man who advanced the money or credit? 

Farmers need money and credit, and the Federal farm 
loan system was created in 1915, at the earnest request of the 
farmers, to assist them in extending and expanding their 
business. The purpose of the federal farm loan act is to 
provide capital for agricultural development, to create stand- 
ard forms of investment based upon farm mortgages, to 
equalize rates of interest upon farm loans and to furnish a 
market for United States bonds. The business is managed by 
a board of five members. The machinery consists of federal 
land banks, joint stock banks and national farm loan asso- 
ciations. Without entering into a discussion of the merits 
or demerits -of the federal farm loan act, it is sufficient to call 

D105] 



Unto The Hills 

attention to the fact that under its provisions 4,300 national 
farm loan associations have been formed. There are 25 joint 
stock banks. A recent decision of the United States Supreme 
Court resulted in a resumption of business by these banks 
and associations. Local national farm associations are formed 
with a minimum capital of $100,000. These associations sub- 
scribe to stock in a land bank, the Federal government taking 
the balance up to the required minimum of $750,000. Joint 
stock banks are formed with a minimum capital of $250,000, 
to lend money -or credit or capital on farm mortgage security, 
and to issue farm loan bonds. It is a system of farm co- 
operation backed by the government. These operations are 
surely voluntary on the part of the farmers, first to pay off 
old mortgages, second to extend operations. Money or capital 
is borrowed at a lower rate of interest than formerly charged 
for farm mortgages. As a further inducement to assist the 
farmers, these farm loan bonds are free from taxes, which 
tends to lower the rate of interest. 

The statement of the federal land bank dated April 30, 
1922, shows assets amounting to $560,845,416 and undivided 
profits for the year amounting to $3,805,048. The net earn- 
ings up to April 30 were $9,520,917. On that day the United 
States held $5,624,845 of the stock of the federal land banks, 
the total capital stock being $31,475,165. The land banks on 
this date, had $505,365,588 out on mortgage loans to the 
farmers. The joint stock land banks, on April 30, 1922, 
showed total assets of $139,737,130, undivided profits of 
$359,212, and mortgage loans to the farmers amounting to 
$113,405,361. Thus the federal land banks and the joint stock 
land banks are loaning the farmers about $618,770,000 at a 
low rate of interest. While these loans represent only about 

[io6] 



Causes of the Agricultural Crisis 

one-sixth of the total mortgage loans on all the farms, it 
represents a great saving in interest. 

Some one says: ''A sad commentary on our agricultural 
leadership is that today the only solution they have to offer 
is a pledge for legislation which will make more money 
available for the farmer, a companion piece to the federal 
farm loan system; when as a matter of fact the farmer has 
already poured money into the ^rathole' of interest." This 
might be said of any industry or any productive calling; 
yet interest is only another name for profit on savings — and 
profit is the very thing the farmer demands. 

While it is true that mortgage loans have more than 
doubled during the past ten years, nevertheless the value of 
farms mortgaged has doubled also. Likewise it is true that 
farmers have had great difficulties in paying their debts, and 
the low prices of 1920 aggravated the situation. The joint 
commission of agricultural inquiry believes that the farmers^ 
difiiculties are due largely to credit restrictions and limita- 
tations. It is proposed to apply the principles of the federal 
reserve system of rediscounting to farm loan banks. 

Obviously the price -of agricultural products is the deter- 
mining factor in the average welfare of the farmers. Prices 
are determined by supply and demand and by cost of pro- 
duction. Normal interest is a small element in the cost of 
production. The big items are labor, material, transportation 
and distribution. Bonds, mortgages, interest and money 
lenders are held up to the farmers as great obstacles in the 
way of agricultural prosperity. Under these same ^'ob- 
stacles" farmers obtain credit and capital at very moderate 
rates. 

It must be admitted that farmers prospered between 
1917 and 1919 ; but it was war prosperity. Many thought war 

[107] 



Unto The Hills 

prices would be permanent; and indulged in unwise borrow- 
ing. The world-wide collapse of 1920 caught many farmers 
and stock raisers. Had it not been for the banking and farm 
loan system of the country, bankruptcy among farmers would 
have been wide-spread. Within the last year economic forces 
have come into play and the price of cotton, of wheat and 
cattle has advanced. The farmers have seen their holdings 
increase in value many millions. 

American farmers have been the victims, not of bankers 
and money lenders, not of the prevailing system of interest, 
but of inexorable and economic laws. They were saved from 
far greater distress by the very system of banking and loaning 
which many denounce. The "War Finance Corporation and 
the federal system of credits saved many of the farmers from 
certain disaster. With a readjustment of world economic con- 
ditions and a return to normal, the prices of farm products 
will advance steadily to a fair level. Then farm mortgages 
may be lifted. 

To abolish the present monetary system, discard banks 
and interest and all forms of loans, would strike a death blow 
to thrift and savings. Farmers would have no inducement to 
pay off their debts and save, and become real capitalists. If 
the federal government should undertake to print enough 
paper money to loan the farmers, without interest, so that the 
four billions of dollars in farm mortgages could be lifted 
thereby, the fiat money thus used would well nigh be worth- 
less, when once in circulation ; and it might require one hun- 
dred paper dollars to buy a loaf of bread or one thousand 
dollars to buy a shirt. Farmers would be ruined speedily, be- 
cause present values would disappear. 

There is no short road to freedom from debt, for farmers 
or any one else, this side the court of bankruptcy. It is a 

[io8] 



Causes of the Agricultural Crisis 

long, hard journey ; yet is made easier and more certain tinder 
a stable monetary system whereby capital and credit are eas- 
ily obtained, and obligations settled with a minimum expen- 
diture of energy and toil. An honest day's work will settle 
more debts under a system of a sound, honest currency, than 
under a system -of cheap and inflated currency. Farmers and 
wage-earners become capitalists and money lenders much more 
easily under a sound system of credit than under a plan of 
wild-cat currency. 

Agriculture is indeed the '^ backbone of the country;'' 
and legislation has promoted and assisted it, so far as legis- 
lation can. Farmers are exempt from the anti-trust laws, are 
permitted to issue tax-exempt securities, can co-operate, and 
can borrow money or capital at a low rate of interest. Soon 
railroad freight rates will be lowered and marketing made 
easier. The farmers themselves must and will do the rest. 



[109] 



CHAPTER XIV 
Our Banking System 

CURRENCY ** reformers" of a certain type, charge that 
banks and bankers are "spreading propaganda to crush 
money heresies" and that the sources of this propaganda 
are the so-called experts in the big banks, who filter their 
information into little banks and newspapers. ''But what 
the individual banks are doing is not considered sufficient," 
it is said. "The American Bankers' Association is now plan- 
ning a most elaborate propaganda venture." Finally the 
position of the average local banker as an authority on 
money matters is ridiculed and assailed by these "re- 
formers." 

Obviously the function of the banker in a city or com- 
munity is not understood by the average citizen, else there 
would be no fertile ground in which financial weeds could 
grow and flourish. The function of the banker lies in 
economizing the use of money, in mobilizing the capital of 
the city or community, and in keeping a balance between 
the depositers, borrowers and the bank as a custodian of 
other people 's money or capital. 

Originally a banker issued receipts for the deposit of 
metallic money, and the receipts equaled the amount of 
metallic money. Today the modern bank of deposit, dis- 
count and issue, called a commercial bank, deals in credit 
and accumulated capital, represented by what we call money. 
Banking credit represents stored purchasing power. It 

[no] 



Our Banhing System 

is called ,inoney or rather is made concrete by the use of 
what we call money.. The banker undertakes to loan 
deposits, transferring to borrower the stored purchasing 
power of the money borrowed and in the custody of the 
banker. Originally no banker ever loaned more than the 
combined amounts in metallic money intrusted to his care. 
But when a banker undertakes to lend a half or three- 
quarters of the currency in his bank, while holding out his 
ability and willingness to pay currency (in gold or its 
equivalent) to all depositors who ask for it, the power of a 
given amount of currency is multiplied nearly four-fold. A 
bank that changes from a simple system of metallic deposit 
to a credit bank holding only 25 per cent in currency 
against its obligations to pay currency, economizes the use 
of money by three-fold. 

The commercial banker, therefore, is a dealer in money. 
He provides money or credit to those who need it. He keeps 
money for hire, and nearly all of it belongs not to him and 
his stockholders, but to the depositors. He keeps money 
for hire just as a livery stable keeper keeps horses and 
carriages for hire, or a garage keeps automobiles for hire. 
The accumulation of capital or money for hire relieves the 
individual of the necessity of keeping it, just as a bakery re- 
lieves the individual of the necessity of continually keeping 
bread on hand against any possible need. This accumulation 
or mobilization of capital in the form of credit or money, 
economizes it, and increases its power for the accumulation 
of more capital. The borrow^er who may need gold or its 
equivalent, does not buy it; he goes to the bank and borrows 
it, paying interest therefor. This interest does not belong 
to the banker, wholly. It belongs to the depositors first 
and the stockholders next, in proportion to the capital 

[III] 



Unto The Hills 

they have saved either in the form of deposits or of capital 
stock. 

The banker holds out the continuous offer to supply 
gold (or its equivalent) against all deposits and other 
obligations. By making himself the custodian, and the 
bank the reservoir of such gold or its equivalent, he re- 
lieves the individual from keeping it on hand. Deposits 
of merchants and traders, are stored purchasing power, to 
be used in the future as need requires. The depositor does 
not create new capital, he simply transfers to the banker 
the purchasing power or the right which he (the depositor) 
possesses. If the banker loans this money or credit to a 
borrower, he transfers to the borrower the same purchasing 
power or the right, which the original depositor possessed. 

The fundamental nature of the transaction does not 
differ when the banker accepts checks, drafts, and bills of 
exchange. All are transfers of this same purchasing power 
or credit or right. Acceptance by the banker as payment of 
debt to the depositor, simply saves the two parties and the 
bank from actually paying out gold or its equivalent in 
some commodity, and receiving it back again. 

The element of credit enters into the transaction when 
the ability of the borrower to pay is tested. The depositor 
transfers his purchasing power or right to the banker, in 
the belief that, if that purchasing power is transferred to a 
borrower, the borrower will repay. The borrower takes the 
capital and uses it in creating more capital. 

Therefore the three great functions of the banker are: 
(1) To steady and make approximately uniform the price 
of money; (2) To serve as an intermediary between capital 
seeking investment, and investors seeking capital — to create 
a sort of public market; (3) To transfer and exchange the 

[112] 



Our Banking System 

various titles to property in capital, measured in money, for 
the creation of more capital. 

The benefit accorded by the direct deposit of capital 
in the form of money or credit, and the acceptance of bank 
notes as currency, is offset by the benefits which banks 
confer upon the public by mobilizing credit and capital, and 
adding to the resources of the community for the creation 
of more capital. The local banker in every community, 
performs a function of inestimable value. Rightly he is 
respected and honored, and his judgment and opinion 
accepted. A few may be false to their trusts, but the 
integrity and wisdom of the vast majority are valuable 
assets to any community — beyond price. Next to the church 
and the school house, every new community demands a bank 
and a reliable banker. The national banking system for 
the first time, stabilized and mobilized this modern credit 
system of banks, and its success for more than a half century 
proved the soundness of its principles. America's bankers 
did much to save the credit and business of the nation after 
the Civil War and during the period of reconstruction. 
Bankers were trustees of millions of depositors, and mentors 
of the safety of the Republic. 

Locally, every banker is more or less the wise promoter 
of new enterprises, and the guiding hand of municipal pro- 
gress. He advises in favor of the profitable ventures and 
against unprofitable ones. In the use and disposition of local 
capital and credit, he opens naturally the vista of municipal 
growth, which is the pride of all citizens. The history of 
every great city is the story of broad-gauged and liberal 
bankers whose vision was clear, whose courage was magnifi- 
cent and whose prophesy came true. Every good banker 
must be conservative. He protects the machinery of 

["3] 



Unto The Hills 

exchange and credit. The success or failure of new enterprises 
rests with him largely. The banker is constrained to be 
conservative for he is handling other people's money; he is a 
trustee, the responsible man. He must keep banking credit 
as solid as gold. Suspension of specie payments, failure to 
redeem notes in gold when demanded, challenges the entire 
system of bank credits. 

It is the banker's business to oppose, yea, fight every 
sort of proposition threatening the trust imposed upon him. 
This justifies fully, any and all efforts to crush so-called 
*' monetary reforms" that threaten to overthrow the solidity 
of the great credit system built up on the gold standard. 
American bankers are custodians of this system, and must 
bend every energy for its preservation. 

The four great benefits of bank note currency are: (1) 
Economy of the precious metals; (2) the accumulation and 
distribution of capital; (3) reduction of the rental rate for 
money; (4) the adjustment of the currency to business 
needs. To secure the preservation of these benefits, the 
banker is pledged, for the benefit of the people as a whole, 
especially those who save, to create more capital. 

Bank notes, although often subject to severe criticism, 
have proved safe. They are simply transfers of credit, but 
safe because they are measured in a unit composed of a 
fixed amount of gold. They have economized gold, and 
made credit possible under a gold standard. The bank 
note is a form of credit, which, under certain conditions, is 
most convenient, and performs most efficiently the work of 
saving the use of metallic money. Bank notes promote the 
activity and mobility of capital, and this is what the country 
needs. The freedom of bank notes is of more direct advan- 
tage in some respects, to the wage-earner and small trader 

[114] 



Our Banking System 

than to the manufacturer and capitalist. The bank note 
is 'Hhe deposit account of humble citizens and small mer- 
chants." The gold unit of measure is essential to this 
security of the wage earner. The same is true of the small 
farmer, most of whose transactions are made with bank 
notes. Finally, a banking currency keeps the volume of 
currency constantly adjusted to the requirements of pro- 
duction and trade. 

Bankers and other clear-headed thinking men, should 
be on their guard now more than ever, against a renewal of 
the assaults on banks, bankers and the accepted world 
standard of sound currency and a sound credit system. 
International trade and commerce have suffered immeasur- 
ably because of the widespread departure from tried 
economic and financial principles, tested by the experience 
of mankind. The credit of a large part of Europe has been 
wrecked by a monetary system based on irredeemable paper 
currency alone. Exports from the United States to Central 
Europe, and imports from Central Europe to the United 
States have declined, primarily because the money of that 
part of the world is of such low purchasing power or value 
in international trade — in fact often worthless. Monetary 
*' reformers" urge the printing of more paper money, and a 
surrender of the gold standard. Against this, the whole 
power of straight-thinking men and women must be directed, 
to avoid world chaos. 

What are the essential recommendations of the econo- 
mists, for the re-establishment of Europe? (1) Balance of 
budgets to open the way to currency stability; (2) co-opera- 
tion among central banks, ''not necessarily confined to 
Europe;" (3) a common monetary standard or unit of 
measure ; (4) gold is the only common standard all European 

[IIS] 



Unto The Bills 

countries could agree to accept; (5) an effective gold 
standard is not possible for some time, but should be the 
ultimate aim; (6) there must be no new paper money or 
fresh credits unrepresented by new assets; (7) a gold value 
or monetary unit must be determined and fixed; (8) an 
international corporation should be created to re-establish 
credits; (9) present exchange is an obstacle to trade; (10) 
an artificial control is futile; (11) within twelve months of 
the restitution of exchange any special restrictions imposed 
on the ground of depressed exchange should be removed. 

As the Federal Keserve Bulletin says : ' ' Much difference 
of opinion exists concerning the specific means to be em- 
ployed and the incidental difficulties likely to be encountered 
in bringing about a return to the gold standard in Europe. 
But there is a gratifying unanimity of opinion among leading 
economists, financiers and statesmen, to the effect that any 
permanent rehabilitation of credit and currency systems, 
will necessitate a return to a gold basis of some sort." The 
argument in favor of the restoration of gold as an inter- 
national standard of value is twofold — first, that no superior 
or better basis for prices has as yet been developed ; second, 
that the use of gold as an international currency or price 
basis affords strong protection against pressure to bring 
about expansion of credit. 

The exchange situation can not be corrected until some 
sort of a gold standard basis is established. A restoration 
of exchange by a system of international valuation of the 
paper money of the countries of Central Europe, on a gold 
basis and not equivalent to repudiation, will be followed 
by further extensions of credit to Europe, and an increase 
in our foreign trade with those countries. 

The solution of this tremendous problem must be left 

[ii6] 



Our Banking System 

to the bar^kers and economists of the world. To ridicule and 
denounce these financial leaders in this critical hour, is 
treason to our own country, to say nothing about treason 
to humanity. American patriots, proud of their country and 
its institutions, and filled with the true American spirit of 
indomitable courage plus native enthusiasm, will aid in 
building up, not assist in tearing down. Wanted: faith in 
America, _ faith in Americans and faith in humanity. The 
whole world is facing another Armageddon. Our duty is 
clear and well defined. 



[117] 



CHAPTER XV 

A Merchant Marine 

THE RISE, decline and fall of the American Merchant 
Marine, its feverish revival under war pressure, is a 
tale familiar to all. It has been recited in volumes of 
printed pages and oceans of spoken words. Yet a state- 
ment of the high spots as a back-ground to the present 
problem is interesting and illuminating. The picture of 
the American Merchant Marine might be divided into five 
parts or periods — the clipper Yankee ships from 1780 to 
1812, sailing on every sea; the struggle with Great Britain 
for supremacy in the ocean carrying trade between 1812 
and 1855; the decline and almost disappearance of the 
American flag on the oceans, between 1855 and 1917; the 
hectic flush from 1917 to 1920; finally the collapse and 
awakening and big problem of 1921-22. 

It is generally understood that in the early days, the 
greatest boon to an American Merchant Marine was the 
wisdom of the fathers who imposed an additional ten per 
cent import duty on foreign goods and merchandise im- 
ported in foreign vessels. The rise of the American Mer- 
chant Marine and the growth of foreign trade for more 
than a quarter of a century, was the marvel of the world 
''without parallel in the history of commerce." More than 
half the commerce of the world was carried in American 
ships. 

At the close of the Revolutionary War, English diplo- 

[ii8] 



A Merchant Marine 

macy began its cunning work. A commercial treaty with 
the United States was consummated providing that "goods 
and merchandise imported into the United States in 
British ships shall pay no higher duties than if imported 
in American ships." This first controversy between the 
treaty-making power and Congress, is graphically told in 
Marshall's Life of Washington; and Wharton in his 
International Latv says: "The question, therefore, which 
was agitated in 1796, whether Congress can refuse to pass 
acts for the execution of treaties, remains still open." 

Commercial treaties with other countries followed, 
until the hands of the United States were tied with the 
cords of "commercial reciprocity." In 1828 the entire 
program of discriminating import duties was suspended by 
act of Congress. 

Whatever may be said as to the wisdom of this program, 
the fact remains that the period between 1812 and 1855 
was one of struggle and peril for the American Merchant 
Marine. The decline was steady and humiliating. The 
period between 1855 and 1914 witnessed an almost annihila- 
tion of American ships in the foreign carrying trade. 
Whereas once between 50 and 70 per cent of America's 
foreign commerce was carried in American ships, there 
was a steadj^ decline until in 1890 only 6.1 per cent was 
carried in American ships. 

Between the close of the Civil War and the beginning 
of the World War, many attempts were made to revive the 
American Merchant Marine by government aid, as other 
maritime countries were doing. The sea postage act of 
1872, the amended postal law of 1892 helped some, but 
were far from productive of satisfactory results. The main 
difficulty, as now, was the excess cost of construction and 

[119] 



Unto The Hills 

operation over foreign ships. In his famous reply to Glad- 
stone in 1890, Blaine referred to the growth of American 
shipping in the coast-wise trade (exclusive to the United 
States since 1817) as ''the one thing the United States 
government has consistently refused to neglect." In 1907 
another attempt was made to increase the mail pay to 
American ships sailing to South America and the Orient. 

This was the background of the picture in 1914 when 
the European war burst upon the world. When the United 
States entered the war, there were no ships to transport 
troops and food and munitions of war. The submarine was 
getting in its deadly work. The tragic neglect of an Ameri- 
can Merchant Marine fell like a pall over the whole nation. 
The Shipping Act of 1916 was the result. It was a govern- 
ment ownership and operating proposition, under the gui- 
dance of the United States Shipping Board and Emergency 
Fleet Corporation, its child. 

The "hectic" period of ship-building began in 1917. 
It is unnecessary to draw back the curtain and again dis- 
close the operations of that unfortunate period from the 
effects of which the United States has not recovered yet, 
five years after. This program of government construction 
of ships for ocean commerce, cost the people about three 
and a half billion dollars up to the close of the war; and 
from three hundred million down to one hundred million 
dollars annually until June 30, 1921; and more than fifty 
million dollars during the fiscal year ending June 30, 1922. 

In addresses late in 1921, the Chairman of the United 
States Shipping Board said that "in an established mer- 
chant marine lies our only hope of world trade," and that 
"American living standards should be maintained on the 
seas as on land ; but to be maintained must be paid for, and 

fi2o] • 



A Merchant Marine 

the difference between American and foreign standards 
must somehow be met." 

Two possible programs presented themselves — one dis- 
criminating import duties, the other direct subsidies. Sec- 
tion 34 of the Merchant Marine Act of 1920, commonly 
known as the Jones Act, directs the President to give notice 
to the several governments with which the United States 
has commercial treaties which prevent discriminating duties, 
that ''so much thereof as imposes any such restriction will 
terminate" on due notice. Every tariff law since the Civil 
War has undertaken to revive the principle of a discriminat- 
ing import duties, but all have failed because the several 
laws recited that "that provision of the law will not apply 
to goods imported in vessels from foreign countries entitled 
by treaty or act of Congress to the same privileges as vessels 
of the United States in American ports." In other words, 
the imposition of an additional duty in favor of American 
vessels was nullified by long-standing commercial treaties. 
As long ago as 1894 an effort was made to have these Com- 
mercial treaties abrogated, in part. Now executives refuse 
to carry out the provision of Section 34 of the Jones Act of 
1920. The hands of the United States are tied. Senator 
Jones of Washington state, said in 1921: ''It will be little 
short of criminal if we do not free ourselves from those 
things that shackle us. ' ' 

The alternative was a program of ship subsidies or 
subventions, which proved to be the fixed policy of the 
administration in 1922. The story of American experi- 
ments with ship "subsidies" dates back to 1855, when, to 
meet British subsidies amounting to $900,000 annually, the 
United States undertook a feeble system of mail pay, 
amounting to $2,000,000 altogether. Three American lines 

[121] 



Unto The Hills 

to Europe and two to South America resulted. In 1858 the 
law was repealed. From 1839 to 1848 Great Britain pur- 
sued a powerful program of subsidy. In 1860-61 Great 
Britain paid an annual subsidy of $4,500,000. This was met 
by an annual payment by Congress of $250,000 for a monthly 
mail line of steamships between Philadelphia and Rio, the 
United States paying $150,000 and Brazil paying $100,000. 
In 1865 the government made a ten year contract with the 
Pacific Mail Company to pay $500,000 for carrying the 
mails. In 1891 another spasmodic effort was made to aid 
American ships by paying $954,000 annually for the carry- 
ing of the mails. 

The feeble act of 1891 was ineffective against powerful 
foreign competition. Still another effort was made in 1908. 
In 1909 annual subsidies amounting to $46,900,000 were 
paid by the five leading maritime nations, not including the 
United States. 

Obviously one of the prime requisites for the establish- 
ment of foreign markets is an American Merchant Marine. 
Foreign trade can not be promoted to the best advantage 
of the United States, unless delivery of goods is made in 
American ships. 

To meet the situation, a group of experts was called 
together to study the situation and formulate a campaign 
and frame a measure calculated to establish permanently 
a program for promoting and protecting an American 
Merchant Marine, and dispose of the vessels built and 
owned by the government during the world war. The 
essential features of the proposal are both direct and in- 
direct — payment of specific sums of money to owners and 
operators of American vessels based on the tonnage and 
length of voyage, the establishment of a building fund and 

[122] 



A Merchant Marine 

the permission of certain tax exemptions. While details 
may change, the principle is established and fixed. 

The purpose of a ship subsidy or government aid 
measure is to assist American shipping engaged in the 
foreign carrying trade, by retiring the government from 
active operation in competition with private owners, and 
by paying the private owners annually about $34,000,000 
as compensation for services rendered. It costs the govern- 
ment now (1922) about $50,000,000 a year to operate its 
ships. 

Great Britain's ocean freight earnings amount to more 
than two billion dollars annually, of which the United States 
pays a good share. Government aid to American owners 
and operators of ships carrying the American flag, it is 
hoped, will divert some of this money to American steamship 
lines and help promote America's foreign commerce. 

The fight for the ocean carrying trade of the world is 
on. Preparations for intensive activity are being made 
especially on the Atlantic. Every effort is summoned by 
the powerful maritime interests of Europe to checkmate the 
efforts of the United States to establish a permanent Mer- 
chant Marine of effective size and tonnage. Will American 
patriotism and independence rise to the occasion? 

Under date of August, 1922, the United States Shipping 
Board had 416 steel vessels in active operation, 1,001 steel 
vessels inactive, 249 wood vessels inactive and 9 concrete 
ships inactive. Out of a total of 1,675 vessels, 1,259 were 
tied up, and inactive, scattered all along the coast. Some 
have never traveled under their own power. The inactive 
vessels include 30 tugs. 

Shipping Board vessels in operation are sailing on lines 
between New York, Philadelphia, New Orleans and Baltimore 

[123] 



Unto The Hills 

to Europe, Central America and Eastern South America; 
also to the west coast of South America. Also Shipping 
Board vessels are operated to Cuba and the West Indies, and 
between San Francisco, Seattle and the Orient. 

Obviously freight service is the prime reason why 
American lines of steamships to the principal countries of 
the world should be maintained and protected against ex- 
cessive competition. It is of importance that the United 
States should be practically independent of other countries 
in the ocean carrying trade, that is in the shipment of its 
imports and exports. 

Competition in the ocean carrying trade is intense; it 
will be greater within the next few years. The question is 
this: ''Why should American producers and manufacturers 
depend upon foreign countries and foreign ships to carry 
their exports and imports? Is not a merchant marine of 
vital importance?" 

Will Congress sweep aside all prejudice against the 
word subsidy, and respond to what seems to be the needs 
of the times? All the leading maritime nations of the 
world extend adequate government aid of some sort to their 
merchant marine. Great Britain leads the list. Will Con- 
gress do likewise? Will Congress make it possible for 
American ships and the American flag to survive in the race 
for the carrying trade of the world? 

If the American people wish to see the American flag 
on the ocean; if there is any maritime pride left after the 
experiences of the world war; some sort of government aid 
must be extended to the owners and operators of American 
ships. The doctrine of free trade or free competition in 
the ocean carrying trade resulted disastrously to Ameri- 
cans. Such government aid will mean national independence 

[124] 



A Merchant Marine 

in the carrying of our exports and imports, will tend to 
bring foreign markets into closer communication with the 
American farm and factory, and avoid discrimination and 
delay incident to dependence upon alien delivery of our 
goods and merchandise, and alien transportation of our 
imports. Great Britain's mastery of the seas was won by 
government aid; America must adopt the same program. 
An American Merchant Marine owned, operated and manned 
by Americans, will supplement the great program of 
national protection, stimulate activity on farm and in fac- 
tory, keep more capital at home, promote American inde- 
pendence and American patriotism. 



[125] 



CHAPTER XVI 

Panama and Free Tolls 

THE VOYAGE of the Oregon around Cape Horn in 1898, 
to join the Atlantic fleet, convinced the American 
people that a canal across the Isthmus of Panama was a 
naval as well as a commercial necessity. It was the begin- 
ning of a realization of the dreams of explorers, discoverers, 
rulers and statesmen, from the days of Balboa to the days 
of McKinley and Roosevelt. DeLesseps tried and failed. 
Suez was his monument; Panama his sepulchre. The war 
with Spain and the sensational achievement of the Oregon 
translated a dream into a reality. 

Diplomacy is the background of the Panama Canal ; the 
Monroe doctrine its inspiration; American daring, enter- 
prise and money its foundation. To President McKinley 
goes the honor of initiating the big job of 1889. The tragic 
death of McKinley threw the problem on other shoulders. 

Into this great international drama of the century enter 
President Roosevelt and his Secretary of State John Hay. 
The powerful personality and intense Americanism of Presi- 
dent Roosevelt, the calm temperament and analytical mind 
of John Hay, gave to the United States in this critical 
hour, two patriots unexcelled in American history. 

There were three initial steps facing the President and 
his Secretary of State — an agreement with the Panama 
Canal Company, an agreement with the United States of 
Columbia, and the actual launching of the project. The 
first was accomplished peacefully by the payment of 

[126] 



Panama and Free Tolls 

$40,000,000 to the French Panama Company. The second 
was accomplished not so peacefully, but in a characteristi- 
cally Roosevelt manner. Perhaps it is wise to pass over the 
partisan controversy around the birth of the Republic of 
Panama. It is a closed chapter since, on the 20th of April, 
1921, the Columbian treaty, by which the United States 
agreed to pay Columbia $25,000,000 was ratified by the 
Senate. The third step was accomplished after much pro- 
fessional jealousy, differences in expert opinion and other 
causes — not a very glorious chapter in American history. 
In April 1907, President Roosevelt said: ''I'm going to give 
the job to the Army and somebody who can not quit." And 
he did. The Canal Zone was created and the work pro- 
gressed under the direction of Army officials. 

Seven years later, in August, 1914, the Canal was 
opened for commerce. The ''ditch" was the most stupen- 
dous engineering task undertaken in history up to that 
time. Enough rock and dirt was taken from the bed of 
the Canal to build a wall as high and as thick as the great 
wall of China, 2,500 miles long. Today the Canal is a suc- 
cess. In the fiscal year 1913 the receipts in tolls were 
$4,343,383 and the expenses were $4,123,128; in 1921 the 
tolls were $12,040,116 and the expenses $9,528,300. The 
fiscal year 1922 shows receipts amounting to $11,385,000 and 
expenditures amounting to $7,919,000 — a profit of $3,466,000 
to the Government. The expenditures are outside of fortifi- 
cations. 

The United States has transformed this romantic and 
historic spot from a pestilence to a paradise. The Panama 
Canal, with its terminal cities, is now one of the wonders of the 
world, attractive because of its marvelous scenery, its 
balmy air, its warm and seductive climate. The atmosphere 

[127] 



Unto The Hills 

is filled with the tragic story of Columbus, the fable 
of Ponce de Leon and the tales of ancient forts, castles and 
dungeons. 

But the Panama question is not settled, nor are the 
treaties and laws under which the Canal was constructed 
and is operated, a closed book. For many years, a diplomatic 
and Congressional warfare has been waged around Panama, 
and the rights of the United States and Great Britain in the 
premises. 

The high spots in this long-drawn-out drama are these : 
The Clayton-Bulwer treaty of 1850 guaranteed the neu- 
trality of the Canal (referring to the Nicaragua Canal) 
and provided that the United States and Great Britain 
should share equally in the construction and control of 
the proposed waterway across the isthmus. Some one has 
said this was the only time ''the Monroe Doctrine in spirit 
has been surrendered." 

In 1901 the United States persuaded Great Britain to 
abrogate the Clayton-Bulwer treaty, and agree to the Hay- 
Pauncefote treaty transferring the rights of ownership and 
construction to the United States exclusively. Article III 
of this convention of 1901 reads as follows: ''The canal 
shall be free and open to vessels of commerce and war, of 
all nations observing these rules, on terms of entire equality 
so there shall be no discrimination against any such nation 
or its citizens or subjects, in respect of the conditions, or 
charges of traffic or otherwise." 

The act of Congress providing for the opening of the 
Canal, aproved August 24, 1912, contained the "free tolls 
for American coast-wise vessels" clause, which is the ques- 
tion at issue. The presidential campaign of 1912 was in 
progress, and both leading political parties indorsed "free 

[128] 



Panama and Free Tolls 

tolls to American ships engaged in coast-wise trade, passing 
through the Canal.'* 

March 5, 1914, President Wilson appeared before Con- 
gress in person and declared that "exemption constitutes a 
mistaken policy from every point of view . . . We ought 
to reverse our action ... I shall not know how to deal 
with other matters of even greater delicacy and conse- 
quences if you do not grant it to me in ungrudging 
measure." 

A storm broke over the capitol. The passions of party 
strife rolled in waves of eloquence. Debate lasted six months. 
It was the most illuminating, exhaustive and eloquent dis- 
cussion held in Congress since the ''free silver '* days of 
1896. The great speeches made in this memorable debate, 
on both sides, are search-lights on the towers of American 
diplomatic history, covering a period of sixty-four years — 
from 1850 to 1914. They dealt with American honor, 
American independence, American sovereignty and Ameri- 
can treaty obligations to other nations. However, the out- 
standing fact remains, that after a discussion of more than 
sixty years, the fundamental questions have not been settled 
yet. 

The supporters of the repeal measure urged that the 
United States must stand by its treaty obligations. The other 
side argued that the Canal was built with American money 
and by American brains, and that the Hay-Pauncefote treaty 
** never contemplated the United States should be deprived of 
the right of arranging and regulating its coast-wise commerce 
as it sees fit," and that the words "on terms of equality" in 
the treaty are intended to prevent the United States from 
discriminating in favor of one foreign nation against another 
foreign nation. 

[129] 



Unto The Hills 

For a long time, the meaning hidden behind President 
Wilson's phrase: ''I shall not know how to deal with other 
matters of even greater delicacy and nearer consequences," 
was a mystery. Some guessed it meant Mexico, others that it 
referred to American sympathy for Ireland, both -of which 
appeared to touch American relations with Great Britain. 
Later, publication of former Ambassador Page's correspon- 
dence with Co. E. M. House and President Wilson, threw a 
flood of light on the mystery. In these letters. Ambassador 
Page tells of the ^'embarrassment he is under in London 
because of the free Panama tolls controversy." Page wrote 
House : ' ' This canal tolls matter stands in the way of every- 
thing They (the British) are suspicious of our govern- 
ment because, they contend, it has violated its faith." Am- 
bassador Page made a speech in London in which he stirred 
up the ''free tolls" men in Congress. Page's removal was 
demanded. 

Here are the questions unsettled still: (1) What is the 
true interpretation of the Clayton-Bulwer treaty? (2) What 
is the correct interpretation of the Hay-Pauncefote treaty? 

(3) Has the United States the right to exempt American 
ooast-wise vessels from payment of tolls in the Panama Canal ? 

(4) If so, what will be the economic effect? 

It was agreed to settle these questions in the Senate early 
in October 1921, but the agreement was dissolved because of 
the approaching Arms Conference. It was stated that the 
administration feared a re-opening of the question on the 
eve of an international conference in Washington would 
cause embarrassment to the United States, the host of the 
delegates from Great Britain coming to discuss the pathway 
to a larger measure of international peace. It was feared by 
some that a vote to establish "free tolls" might offend Great 

[130] 



Panama and Free Tolls 

Britain and give rise to a repetition of President Wilson's 
cryptic message: ''I shall not know how to deal with other 
matters of even greater delicacy and nearer consequences.'' 
The questions involved are still unanswered, and the ''free 
tolls" problem is unsolved. 

The financial and economic phase of the situation is 
another problem. The Canal is more than self-supporting. 
What amount of revenue may be lost under an ''American 
free toll" program is uncertain. Obviously it will be quite 
an amount. On the other hand, such an exemption will be 
a material assistance to American shipping. It is argued that 
"free tolls" for American vessels in the coast-wise trade will 
affect foreign vessels, since foreign vessels now are excluded 
from American coast-wise trade. However, such a program 
would tend to reduce freight rates from coast to coast, thus 
affecting trans-continental railroads. 

The promoters of "free tolls" say: "If the problem is 
purely American and wholly domestic, why this clamor from 
abroad?" 

The Panama and "free tolls" question will never be set- 
tled permanently until it is settled from an American point 
of view and for American welfare. 



[131] 



CHAPTER XVII 

''Most Favored Nation" 

ONE of the difficulties encountered by all nations in the 
problem of readjustment of war conditions, is the dis- 
turbance of what is known as foreign exchange — that is, 
the gold value of the standard units of measure as compared 
with the American unit of measure, the gold dollar. For 
many years there has been a practically uniform rate of 
exchange between the American dollar, the English pound, 
the French franc or the German mark, so that the value of 
exports and imports between the various countries could be 
measured accurately. 

The world war and the resulting vast quantities of paper 
currency issued, have thrown this ** foreign exchange" or 
table of comparative gold values, out of joint. Obviously, 
with exchange disarranged, the values of all imports and 
exports are disarranged; and any country imposing ad va- 
lorem duties, that is duties based on a certain per cent of 
value of imported goods, finds itself facing a new and per- 
plexing problem. This was the situation which confronted 
Congress for more than a year and a half. In a large measure, 
it may account for some of the delay. 

To overcome the situation, the leading commercial coun- 
tries have devised new methods of applying ad valorem duties. 
To bridge the chasm between normal exchange of standard 
units of monetary measure and existing abnormal exchange, 
the plan of limiting the depreciation of foreign money or 

[132] 



''Most Favored Nation'^ 

currency when applied to the valuation of imports, has been 
adopted. In plain language, the effect is to establish in the 
country of importation (Canada for instance) a fictitious 
valuation of the foreign unit of measure, to prevent a drop 
in, perhaps a disappearance of, the ad valorem duty. An ad 
valorem duty of 50 per cent drops to nothing almost when the 
value of the imported article is, for example, 50 cents or $1 
in gold. 

Under the American law and practice, whenever the 
price or value of merchandise obtained by purchase or con- 
signed for sale in the United States, is expressed in the invoice 
in a currency which is depreciated as compared with the 
standard coin currency of the country of exportation, a cur- 
rency certificate must be attached to the invoice showing the 
percentage of depreciation in the terms of the standard cur- 
rency of the country from whence the goods are imported. 
If the United States consul for any reason is unable to so 
certify, he shall attach a certificate showing the rate at which 
such depreciated currency is exchanged for United States 
money in the principal markets of the country whence the 
goods are imported. 

The collector of customs is required to convert such 
depreciated currency into United States money, under cer- 
tain prescribed regulations laid down in the new tariff law, 
to wit: The value of foreign coin is that of the pure metal 
of such coin of standard value ; this value is estimated quar- 
terly by the Director of the Mint and proclaimed by the Sec- 
retary of the Treasury quarterly, on the first day of January, 
April, July and October of each year; in assessing and col- 
lecting duties, all conversions of currency are made at the 
values proclaimed by the Secretary of the Treasury for the 
quarter in which the merchandise was exported from the 



Unto The Hills 

foreign country; if no such value has been proclaimed, or if 
the value so proclaimed varies by five per cent or more from 
the value measured by the buying rate in the New York 
market at noon on the day of exportation from the foreign 
country, conversion is made at a value measured by that 
buying rate ; such buying rate is the rate for cable transfers 
payable in the foreign currency converted, determined by 
the Federal Reserve Bank of New York and certified by the 
Secretary of the Treasury. 

The invoice value of all imported articles is converted 
into United States currency at the prevailing rate of exchange. 
Countries having a greater depreciation in currency will pay 
a lower ad valorem duty than countries having a less depre- 
ciation. Depreciation of currency tends to lower the cost of 
production; and the invoice is supposed to reflect the cost 
of production, primarily. Thus depreciation of currency may, 
and usually does, result in different ad valorem duties paid 
by different countries on substantially the same sort of mer- 
chandise. This is one of the reasons why the so-called 
American valuation plan of assessment was suggested; it 
tends to make an ad valorem duty on a given kind of mer- 
chandise, uniform. 

The practical result of foreign valuation assessment, 
when there is a constant and rapid change in the rates of 
exchange with foreign countries, is to discriminate more or 
less in favor of or against certain countries, in the matter of 
import duties. Also it opens up another important question 
— the construction of our commercial treaties and what is 
known as the "most favored nation clause," which appears 
in nearly all such treaties. What are these treaties? What 
does the ''most favored nation" clause mean? What is the 
relation between foreign exchange and the tariff? What 

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*^Most Favored Nation^ ^ 

bearing have these historical matters on the present com- 
mercial situation and a tariff to meet present conditions? 

Modern treaties cover a variety -of subjects ; but the pres- 
ent consideration will be confined to trade, customs laws and 
regulations. All of our earlier treaties were treaties of ' ' amity 
and commerce. ' ' The first American treaty made with France 
in 1778, contained this article: ''The most Christian King 
and the United States engage mutually not to grant any 
particular favor to other nations, in respect of commerce 
and navigation, which shall not immediately become common 
to the other party, who shall enjoy the same favor, freely, if 
the concession was made freely, or on allowing the same com- 
pensation, if the concession was conditioned. ' ' The language 
employed was "the most favored nation" clause, so-called. 

This "most favored nation clause" has come down from 
early commercial eras, before the period of modern nations, 
of industrialism or tariffs. The European practice was foun- 
ded on what was then known as "commercial liberalism" 
which now is denominated otherwise. Each state desired the 
same concession granted to any other state. An instrument 
was devised to automatically secure to newly contracting 
states the benefits of concessions previously made to other 
states. That instrument was "the most favored nation 
clause" which is found in nearly all American commercial 
treaties. It was transplanted from Europe to America. 

In one form or another, this formula was inserted in 
commercial treaties subsequently put into force by the 
United States. Our treaty of "amity, commerce and naviga- 
tion" with the Netherlands in 1782 provided that "no other 
or greater duties on imports of whatever nature shall be paid 
than those which the nations the most favored are or shall be 
obliged to pay; and they shall enjoy all the rights, liberties, 

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privileges, immunities and exemptions in trade, navigation 
and commerce which the said nations do or shall enjoy.** 
Our commercial treaty with Sweden in 1783 contained the 
same provisions substantially. Our treaties with Prussia in 
1785, in 1799 and in 1828 gave mutual concessions, the last 
embodying the ''most favored nation clause.*' Our treaty 
with France in 1800 also contained the ' ' most favored nation * * 
clause in these words : ' ' The two parties should enjoy in the 
ports of each other, in regard to commerce and navigation, 
the privileges of the most favored nation." Our treaty with 
France in 1803 concluding the purchase "of the Louisiana 
territory, said that ' ' the ships of France shall be treated upon 
the same footing of the most favored nations in the ports 
above mentioned." Our treaty with Great Britain in 1815 
provided for "most favored nation treatment." 

For many decades no single feature of modern commercial 
treaties has occasioned more or greater difficulties of inter- 
pretation than the pledge known as the "most favored nation 
clause." Obviously its intent is to assure to each party 
signing the treaty that it has been put by the other nation in 
a position as advantageous as that accorded to any other 
nation, and that it shall not subsequently be put in a less 
advantageous position in the event that greater favors or 
privileges are granted to a third state. 

In the course of time there have developed two schools 
of interpretation. The American interpretation insists on 
maintaining a distinction between favors granted expressly 
in return for present and recognized compensation. The 
European interpretations have eliminated this distinction and 
insisted that the "most favored nation" treatment must be 
accorded whether there is reciprocal concession or not. 

The so-called American interpretation has come down to 

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''Most Favored Nation'' 

us from John Jay in 1787, then Secretary of the Department 
of Foreign Affairs. Mr. Jay then said, in substance, that he 
distinguished between favors granted gratuitously and 
granted reciprocally. The same question was decided by 
John Quincy Adams in 1817 and again in 1821 by President 
Monroe. The American doctrine was established on the 
theory that to claim a privilege under the *'most favored 
nation'^ clause, the nation asking for it must grant an equiva- 
lent. Mr. Clay and Mr. Van Buren, as Secretaries of State, 
maintained the views of their predecessors. Secretary of 
State Frelinghuysen followed the same precedents in 1884. 
The American interpretation has been established by decisions 
covering more than a quarter of a century. 

The courts have interpreted the ''m-ost favored nation" 
clause in the same way. In the famous case arising out of 
the United States-Hawaiian treaty of reciprocity, the court 
said: ''The treaty with the Hawaiian Islands is reciprocal, 
and no violation of the treaty with Denmark; the United 
States is not bound to extend to Denmark, without compen- 
sation, privileges conceded to Hawaii, in exchange for valuable 
concessions." The tariff law of 1897 made reciprocal agree- 
ments with four European countries, and the court held the 
same as in the Hawaiian case. 

On these rulings and decisions is based the time-bonored 
American interpretation of the ''most favored nation" clause, 
which is, that it is not applicable to reciprocity treaties. 
Thus, when the United States grants concessions to another 
state in return for compensating concessions, the United 
States government holds that a third state is only entitled to 
obtain extension of the concession to itself by granting similar 
concessions. 

However, since the new tariff of 1922 practically 

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abandons reciprocity and substitutes executive retaliation in 
ease of discrimination by any country against the trade and 
commerce of the United States, the application of the ''most 
favored nation" clause to reciprocity is not a live question. 

We have seen that the "most favored nation" clause in 
most of our commercial treaties, prevents the imposition of 
a discriminating import duty to assist in promoting and pro- 
tecting an American merchant marine. Both President 
Wilson and President Harding refused to terminate those 
portions of our commercial treaties prohibiting such discrim- 
ination, on the ground that such termination would disturb 
and complicate our commercial relations with many countries. 

But since the world war, another element has entered 
into the problem, namely the depreciation of foreign cur- 
rency which automatically causes a discrimination in import 
duties in favor of those countries having the highest currency 
depreciation. This applies only to articles upon which ad 
valorem duties are imposed. For example, a forty per cent 
duty on a German pocket knife invoiced at so many marks 
(valued at 25 cents when converted into American money) is 
ten cents. A duty of forty per cent on a similar English knife 
invoiced as so many pence or shillings (valued at 50 cents 
when converted into American money) is twenty cents. In 
the one case the forty per cent duty is ten cents, in the other 
twice as much or twenty cents. Manifestly this is a discrim- 
ination in favor of a country of large currency depreciation 
and consequent low cost of production. It is automatic. 

This departure from pre-war normal exchange and a re- 
sultant variable depreciation of foreign currency, not only 
caused tariff discrimination automatically; it raised another 
point, namely does it not lead to a violation of the spirit of 
the Constitutional provision that "all duties, imposts and 

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*'Most Favored Nation" 

excises shall be uniform throughout the United States. ' ' Im^ 
posts means import duties. A duty of forty per cent on a 
foreign article from Japan might be ten cents, and on a sim- 
ilar article from England might be twenty cents. The duty 
in San Francisco would be one-half the duty in New York. 

This situation arising from depreciated foreign curren- 
cies and discrimination in import duties, was one of the 
powerful arguments in favor of adopting the American valua- 
tion instead of the usual foreign valuation, in assessing ad 
valorem duties. Such duties based on American valuation 
would remove all discrimination, and make import duties uni- 
form on all similar articles, no matter from where imported. 
The new tariff law gives the President authority to apply the 
American valuation if he thinks necessary. 

To avoid these complications and inconsistencies, the new 
tariff law contains what is called a ''flexible tariff" provision, 
permitting and authorizing the President to raise or lower 
any import duty not to exceed fifty per cent, whenever, in his 
opinion, the facts justify such an increase or decrease. The 
difference between the American and foreign cost of produc- 
tion is the basic rule; and this difference widens as foreign 
currency depreciation increases. 

In attempting to solve this part of the problem, has not 
Congress presented another serious legal question, in dele- 
gating legislative authority to the executive? Will not an 
executive increase or decrease of tariff rates involve the rais- 
ing of revenue, and conflict with the spirit of the Constitu- 
tional provision that "all bills for raising revenue shall ori- 
ginate in the House of Representatives T ' These are 
important matters the courts may be called upon to settle. 
Obviously, this experiment, if made permanent, eliminates 
Congress as the tariff making branch of the government. 

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Thus the '^niost favored nation'' rule involves American 
shipping, American tariff laws, and what is known as the 
''open door" — a phrase which is used frequently to conceal 
a low or non-protective tariff program. The *'most favored 
nation" clause, the ''open door" and a "flexible tariff" may- 
lead to the downfall of the principle of American protection. 

It is said that American statesmen have contended for 
equality of opportunity but not for identity of treatment ; for 
the removal and prevention of discriminations, but not for the 
same terms to all states at all times, and in relation to all 
trades. Since 1890 the United States has employed the "most 
favored nation" clause less regularly than before that date. 
In recent years, the United States has made many commercial 
agreements wherein "most favored nation" clauses have not 
been included, largely, perhaps, because of the difficulty over 
the interpretation of the clause. Will the "most favored 
nation" clause in all old treaties be interpreted as a block 
to prevent the United States from asserting its independence 
and its power to solve new problems in the light of reason and 
self-determination? Will ancient commercial treaties be in- 
terpreted, for example, to prevent Congress from pursuing 
any commercial or domestic policy deemed wise ? 

Consideration of these important questions discloses the 
complicated background of the approaches to a sane and safe 
solution of the tariff question. 



[140] 



CHAPTER XVIII 
A World Economic Conference 

IS THERE need of an international economic conference? 
The Washington Arms Conference, the progress made 
in ''understanding" at least in the matter of limitation of 
naval armament and Pacific Islands agreement, has 
strengthened the belief that the doctrine of ''understand- 
ing" might be extended to world economics. It is believed 
by many that if representatives of the powers sitting around 
an international board can come to some satisfactory agree- 
ment to cut down and limit the expenditure of the people's 
money in the building of ships of war; if a four-power 
agreement or contract can be consummated touching 
"loaded" Pacific problems, it is possible for the representa- 
tives of the same and other governments to sit around 
another table of understanding and not only think out 
rationally the causes underlying the world's economic ills, 
but also suggest a remedy, perhaps a cure, beneficial to 
all alike. 

As the call for the Arms Conference came from the 
United States, the nation to suffer least from continued 
excessive expenditures for sea-fighting machines, it is urged 
that a call for a world economic conference could come 
properly from the United States as the nation to suffer least 
from uncontrollable lack of credit, unchecked paper cur- 
rency and loss of business. The United States is in a strong 
economic position comparatively speaking, it is contended, 
and could well afford to take the lead in an effort to help 
the world economically, thereby helping itself. 

[Ui] 



Unto The Hills 

The basis of this school of thought is that the United 
States is powerful enough to set the pace and to check the 
decline of European credit by means of some form of inter- 
national credit. Those who indorse this view of the situation 
assume that Europe can not start the ball rolling, and if 
the United States is to save itself, a beginning must be made 
on this side of the Atlantic. It is argued that Germany is 
the key to the situation, and that Germany is helpless 
because of the harsh Versailles treaty; and, compelled to 
resort to the printing press for her currency, now appeals 
to the allies for help in the payment of reparations. 

''As matters stand now," says a prominent American 
economist, ''there is no escape for Germany, and if Germany 
falls economically and financially, the disaster to other 
countries, and even the United States, will be appalling." 
These economists believe in the establishment of some sort 
of an international bank, with a large part of the gold of 
the United States as a basis of its currency. It is said this 
would make the American dollar the standard currency of 
Europe, and set Europe on its feet. 

On the other hand there is another school of thought 
opposing any entrance of the United States into world 
economic affairs until Europe reveals some ability to func- 
tion collectively for itself. "America must keep hands off 
Europe in the matter of taking the initiative in calling an 
international economic conference," says a prominent 
official in close touch with world economics. "Great as is 
the need of action along this line, I do not think it is time 
for America to move. The real facts are that the world 
has not yet fully demonstrated its ability to function 
economically and financially. Until we are sure of this fact, 

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A World Economic Conference 

America better not call an international economic confer- 
ence.'' 

Which program do the facts justify? The recent decis- 
ion -of leading American bankers not to advance a loan to 
Germany, at least for the present, would seem to indicate 
that the time is not ripe for either an international economic 
conference or an American loan to Germany as the key to 
the arch. So long as the German reparation problem is 
unsettled, the whole European economic problem will be 
unsettled. The United States can not afford to loan money 
to Germany either to pay her reparation bill or to compete 
with American industries in an open American market. 

It is not new to say that the world war destroyed the 
economic machinery by which peoples live and thrive. It 
destroyed the equilibrium of production and distribution, 
of trade and commerce, of money and exchange, and tossed 
into the air all the fixed formulas of human progress. It 
is entirely new to suggest some workable plan or agreement 
under which the economic affairs of the world may be 
restored to normal and the United States saved from the 
consequences of a possible world collapse. Should America 
make the first move, or wait in the hope that Europe may 
put itself in shape to bear its share of the burden? 

The average citizen has almost forgotten that one inter- 
national economic conference was held eighteen months 
before the gathering at Genoa. At the Brussels inter- 
national conference of September and October 1920, twenty- 
four states were represented and twelve others had 
** observing delegates." Germany, Austria, Hungary, 
Belgium and all the newly-made ''near" nations had repre- 
sentatives. The United States has an unofficial observer — 
unofficial because the conference was held under the auspices 

['i'43] 



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of the League of Nations and the United States does not 
officially recognize that organization. 

This conference of 1920 at Brussels was a graphic pic- 
ture of the economic world at that time. Speakers dwelt 
eloquently and pleadingly on the ''abnormal obstacles which 
are hindering business today," and urged that "govern- 
ments strengthen the weak links in the chain of normal com- 
mercial transactions." The conclusion favored budgets, 
reduction of armaments, elimination of subsidies, limitation 
of loans to production, funding of external debts and 
elimination of internal and trade restrictions. The dis- 
cussion and conclusion were from a European point of view. 

What was the Genoa conference, and the background 
of its problems? A conference was held in London, 
December 21st and 22nd, 1921, between Lloyd George and 
Premier Briand, at which the whole question of economic 
restoration of Europe was discussed. As a result, a call was 
issued for a meeting of the Supreme Council at Cannes, 
France. The allied Supreme Council met at Cannes, 
January 6th, 1922, with the Premiers of Great Britain, Prance, 
Belgium and the Japanese Ambassador at Paris in attend- 
ance. Ambassador Harvey was present as an observer, but 
not taking part in the proceedings. Premier Lloyd George 
reviewed the economic situation in Europe, and put forth 
the plan of a Central International Corporation with 
$100,000,000 capital, to organize the restoration of Europe. 
Resolutions were adopted reciting (1) that such a confer- 
ence constitutes an urgent and essential step toward the 
eeonomic reconstruction of Central and Eastern Europe; 
(2) the restoration of the international commerce of Europe 
and the development of resources is necessary; (3) a com- 
mon effort is necessary; (4) large credits are necessary; (5) 

[144] 



A World Economic Conference 

that it is the right of each nation to choose for itself the 
system of government it prefers; (6) foreign investors can 
not invest unless their property rights in a country are 
respected and assured; (7) foreign investments are not 
possible unless all public debts and obligations are recog- 
nized and guaranteed, and contracts carried out; (8) a 
convenient means of exchange is necessary; (9) propaganda 
must stop; (10) aggressions must cease; (11) the Russian 
government must accept the conditions. The United States 
declined an invitation to attend the Genoa conference. 

The background of the Genoa conference was a moun- 
tain of debt, depreciation of currency and a breaking down 
of exchange. It was estimated that the debts of the thirteen 
countries involved in the war exceeded $300,000,000,000, 
reckoned in gold. Germany's paper credit currency 
amounted to more than $140,000,000,000 while Russia's cur- 
rency was estimated in astronomical terms only. The con- 
ference was wrecked on the shoals of Russia and the rocks 
of Germany. The best that can be said is that Genoa was a 
sign-post pointing the way to the Hague. 

The fact that Europe has taken no serious steps to 
inaugurate any plan of self-help would seem to indicate that 
in this crisis, Europe is unable to function. This might 
be seized as an argument against any initiative on the part 
of the United States. Furthermore, it is said, how can a 
bankrupt nation add to the security of its citizens by simply 
issuing bonds, thus increasing its debt? All this seems to 
argue in favor of America *' keeping hands off" until some- 
thing happens — either a total collapse or a slow revival 
obviating the need of any international economic confer- 
ence, with the United States the leading actor. 

It is not difficult to assign a cause for this wide-spread 

[145] 



Unto The Hills 

lack of credit in continental Europe. War is the most un- 
economic of all processes. It not only destroys existing 
wealth and checks future production; it forces excesses in 
credit or paper currency far beyond a corresponding in- 
crease in wealth. Already it has imperiled, if not destroyed, 
the gold standard in many countries resorting to the 
''riotous revenue" of the printing press. 

Russia and Germany lead in the procession of paper 
money countries. Poland is a close third. The paper money 
of these three countries is in such vast quantities as to 
render each almost worthless, when compared with gold. 
The German mark is worth a small fraction of a cent in 
American money, ^ whereas at par it is worth about 23 cents. 
In 1922 it required 22 Polish marks to buy one German 
mark. In other words, a Polish mark was worth about .0000136 
of one cent an American money. Such currency is fantastic, 
grotesque. It is useless to attempt to maintain international 
exchange and normal trade and commerce under such con- 
ditions. 

Obviously the effect is disastrous to the United States. 
American manufacturers and producers can not do much 
business in competition with such countries — can not sell 
them goods and merchandise. As a consequence, American 
exports to these countries have declined rapidly. ''Why 
should we," say these Europeans, ''buy of the United States 
when it takes so much of our money to buy an American 
dollar?" Depreciation of currency in France, Italy and 
Belgium, and to some degree in Great Britain, acts as a 
check on the purchase of American goods by Europeans. 
Depreciated foreign currency is a menace to American busi- 



1 In October, 1922, the German paper mark was quoted at .0003 of a 
cent in American money or gold. 

[146] 



A World Economic Conference 

ness and commerce; it is threatening the export trade of 
the United States and the profits of American shippers. 

So far as the United States is concerned, its primary 
interest in an international economic conference lies in a 
possible restoration to an approximation of the normal par 
value of all foreign currency. Can this be brought about 
unless all foreign countries stop the printing presses and 
cease this issue of paper currency? Might not the United 
States be placed in peril by attempting to take a hand in 
the economic and financial affairs of all the governments of 
the world ? 

On the other hand will such a conference be able to 
make the American dollar a world standard? Will it restore 
pre-war exchange? Can anything but the stopping of the 
printing press bring about such a restoration? Then there 
are the economic problems in the far east, the so-called 
''open doors," the raw material question, the world markets 
and the economic independence of China. Will the four- 
power treaty or "understanding" covering the peaceful 
possession of Pacific islands, or a nine-power ''understand- 
ing" covering a wider sphere, touch the world's economic 
problems? 

Can a world debt be adjusted or refunded in an inter- 
national conference called by the United States? While 
the existence of huge debts is a menace to good inter- 
national relations and peace, might not an international 
economic conference, called by the United States, be seized 
as an auspicious opportunity to ask for wholesale cancella- 
tions of debts? Will the people of the United States indorse 
such a move? Will America be able to stand the pressure 
of "world debt cancellation" already brought to bear by 
powerful representatives of all debtor nations ? 

[■47] 



Unto The Hills 

To such a conference may be linked the struggle for 
trade and commerce, for raw materials and for shipping. 
"Will the nations having the largest deposits of raw materials, 
the largest foreign trade and the largest merchant marine, 
share their advantages with the rest of the world? Will 
surrender of concessions and ports prevent rivalry for trade 
and commerce? Will the "open door" remove the economic 
struggle for markets? Will limitation of naval armaments 
check the speed of ocean steamers and the race for world 
trade? 

These are grave questions to be considered before an 
international economic conference is called by the United 
States. In a proper adjustment of the economic forces of 
the world lies the peace and prosperity of America. Will 
an international economic "understanding" be pregnant 
with peace or peril? In restoring credit to Europe will the 
credit of America be undermined? Perhaps the work of 
the foreign debt refunding commission may answer these 
queries.^ 

In a message to Congress President Harding said: "In 
the main, such a program must be worked out by the nations 
more directly concerned. They must themselves turn to 
heroic remedies for the menacing conditions under which 
they are struggling; then America can help, and America 
means to help." 

Is this a challenge to Europe to help itself first before 
America will undertake to call an international economic 
conference ? Is this notice to Europe that America will help 
Europe only when Europe demonstrates its ability to help 
itself? 



1 See page 59. 

[148] 



CHAPTER XIX 
Economic Consequences of the Arms Conference 

WHEN THE world war closed in 1918, the indebted- 
ness of the world was estimated at $354,000,000,000. 
One estimate was as high as $382,000,000,000. The pre-war 
debt of the world was $43,000,000,000. In four years the 
financial burdens of the people were multiplied more than 
nine times. In 1918 the debt of the United Kingdom was 
$37,000,000,000,' of France $50,000,000,000; of Germany 
$71,000,000,000; of Italy $18,000,000,000; of the United 
States $26,000,000,000. The effect of such a staggering 
weight of debt has thrown out of adjustment all the 
economic forces and monetary laws, taxing the ingenuity 
and patience of humanity. The consequences are not con- 
fined to Europe, but reach the farthest limits of the com- 
mercial world. Its burdens are crushing the hope and life 
out of the masses, for the most exacting taskmaster in the 
world is the public debt. 

More than four years have rolled around and still the 
most stupendous thing that confronts the people is this 
world debt. With one or two notable exceptions this debt 
has not decreased materially. It paralyzes industry, in- 
creases unemployment, stagnates trade and commerce. In 
England, Germany and Japan, there are signs of public 
uprisings, while millions of wage-earners still walk the 
streets asking for work. Strikes add to the turmoil. Manu- 
facturers can not pay the wages demanded because they are 
taxed until they can not be taxed further. 



1 Great Britain's debt now (November, 1922) $35,000,000,000. 

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In 1921 it was discovered that out of every dollar paid 
in taxes by the people of the United States for all purposes, 
about 93 cents went for wars and preparation for wars. 
Before the world war about 76 cents of every dollar went 
for war purproses. The cost of civil activities from 1909 
to 1919 averaged $2.15 a year per capita, yet commodities 
doubled in price, so that the cost of civil activities measured 
in commodities, in 1920, was only one half the cost in 1910. 
However, appropriations and taxes climbed higher and 
higher and the people were bowed low. 

Between 1834 and 1914 the navy department disbursed 
$6,907,369,032. Both the army and navy (without pensions) 
disbursed $29,909,739,041. Now it is realized that oppressive 
taxes will break down the most patient and loyal people. 

In 1920 the tax burden of the United States was $37.40 
per capita, of which $2.50 was for ordinary purposes and 
$34.90 for military and naval purposes, pensions, interest and 
preparation for war. 

The recklessness of expenditure following the war kept 
pace with the fever of greed and jealousy. In 1920 the 
nations were moved by a nationalism more passionate and 
a rivalry more bitter than before the great war. The im- 
potency of the Versailles treaty brought about the prostra- 
tion of Europe even more than the waste of war. Even when 
the first cry for world economy was heard in the Senate 
of the United States in December 1920, the leading maritime 
nations of the world were planning elaborate campaigns 
for further vast expenditures for ships of war. Great 
Britain appropriated $500,000,000 for her navy, resolved to 
have a fleet ''to be maintained at a strength equal to that of 
any other nation." Her 1922 program called for 
$450,000,000. Japan was preparing for more battle ships 

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Economic Consequences of the Arms Conference 

and battle-cruisers, light cruisers and submarines. The 
naval program of the United States for 1921 was the con- 
struction of 16 capital ships costing about $40,000,000 each. 
The report of the General Board of 1919 recommended 18 
great battle-ships "to be completed as expeditiously as 
possible." The fever of spending contracted during the 
war still raged. The people in 1920-21 saw nothing but more 
appropriations and taxes. A continued race for naval 
armament meant world bankruptcy. 

The initial legislation for the re-building of the Ameri- 
can navy was in 1882. Fifteen first line battle ships have 
cost $193,059,000; fifteen second line battle ships have cost 
$95,252,000; eleven cruisers have cost $55,883,000; two light 
cruisers have cost $5,663,000. This is a total of over 
$360,000,000. In 1921 there were 813 war ships in service 
in the United States navy, 79 under construction and 19 
authorized — a total of 911. 

When the naval programs of the leading powers in 
1912 were placed along side the proposed programs of 
1920, the people began to wonder what the end would be. 
In 1912 Great Britain spent only $80,662,000; Germany only 
$59,000,000; France only $35,000,000; Russian only 
$34,487,000. A year before the world war these four 
powers spent only $253,312,000. Why should the United 
States, in a time of peace, appropriate $2,200,000,000 in 
1919, $624,000,000 in 1920, and $764,000,000 in 1921? It was 
easy to see that the economic effect of this vast expenditure 
would be disastrous, and the end of the road bankruptcy. 
Business was distressed, the farmers of the west were para- 
lyzed with low prices of farm products and high taxes. 

The tax-payers of the country viewed with consterna- 
tion the growing appropriations for the American navy^ — 



Unto The Hills 

$137,000,000 in 1913; $143,000,000 in 1914; $318,000,000 in 
1917; $1,774,000,000 in 1918; $2,222,000,000 in 1919; 
$624,000,000 in 1920 and $764,000,000 in 1921. 

This was the background of the Arms Conference. 
The big four nations — the United States, Great Britain, 
France and Japan — saw bankruptcy right ahead if naval 
construction on the existing scale of wild extravagance was 
continued many years more. Already the nations of the 
world, not excepting the United States, were saturated with 
inflated paper money, made necessary by public and private 
extravagance, nevertheless disturbing to both domestic and 
international trade. The doctrine of preparedness, dear to 
the hearts of all true Americans, appeared to have over- 
reached all bounds. If America's contributions to the 
**war for civilization" were to endure, the burdens of taxa- 
tion must be lifted. 

If the Arms Conference had done nothing more than 
bring about a naval holiday until 1947 (except for replace- 
ment) it would have scored a great success. The three 
great powers reduced their capital ships, limited tonnage of 
ships and the calibre of guns, thus eliminating the competi- 
tion for armament. The economic consequences of this one 
act will be tremondous. It will save the people of these four 
nations about $1,500,000,000 annually, and interest amount- 
ing to nearly $900,000,000 annually. It will turn the atten- 
tion of these people to the production of wealth and to 
trade and commerce, reduce the world's debts, restore to 
normal the value of the world's currency, revive inter- 
national trade and help to re-establish international ex- 
change.^ 



1 In October, 1922, neither France nor Italy had ratified the naval disarma- 
ment treaty, signed by the United States, Great Britain, France, Japan and Italy. 

[>52] 



Economic Consequences of the Arms Conference 

The economic consequences of the so-called four-power 
pact whereby the United States, Great Britain, France and 
Japan agree to respect the insular possessions or dominions 
of each other in the far east, are not so clearly defined,^ 
unless the pact protects the Philippines against aggression 
and lessens the necessity of ships of war and armies from 
the United States to protect those possessions. It may be 
that the four-power pact will, for a time at least, be a 
substitute for a possible future separation of the islands 
from the United States. If protection of the Philippines is 
a burden or a peril, that burden may be lifted and the 
economic development of the island be advanced under the 
four-power pact. At all events, no other nation is likely 
to seize them or undertake to seize them. This is an economic 
gain, and a step toward peace in the Pacific. 

The Anglo-Japanese alliance was an economic menace." 
At least the United States now has an equal opportunity 
in the far east game, and at the same time is not unmindful 
of Washington's saying that "no nation is to be trusted 
further than it is bound by its own interests, and no prudent 
statesman or politician will venture to depart from it." 
While the United States has joined with three of the great 
powers to respect Great Britain's Indian possessions, and 
Japan's insular possessions obtained under the Versailles 
treaty and otherwise, nevertheless the Philippines are safe 
strategically, commercially and economically. 

The Arms Conference made great economic strides in 
forcing a recognition of the political independence and terri- 



2 The four-power treaty of 1922, signed by the United States, Great Britain, 
France and Japan, remains in force for ten years. 

3 The Anglo-Japanese treaty of 1905, remains binding until the expiration 
of one year after notice of termination by either party. It guarantees the 
status quo of Asia including India, Persia and Mesopotamia, and gives Japan 
the active backing and support of Great Britain in case of war over far 
eastern matters. See page 162. 

[153] 



Unto The Hills 

torial integrity of China and a better understanding of the 
"open door."* The economic consequences of this acomplish- 
ment are clear and far-reaching. It gives to China a 
larger and better opportunity to work out her own salva- 
tion, without the constant peril of spoliation by other and 
stronger countries. China has been the prey of at least 
four nations, commercially and economically speaking. 
China is rich in raw materials and natural products, and is 
looked upon with envious eyes by the traders of the world. 
The Arms Conference tells the nations of the world "hands 
off," "a square deal for all," "no concessions by China 
to any nation" and "the open door for all." 

Trade with China is carried on largely by Great Britain, 
Japan and the United States. In 1920 Great Britain and 
her colonies sold China $208,000,000 in merchandise and 
bought $135,000,000 from her. Japan sold China 
$205,000,000 and bought $109,000,000. The United States 
sold China $119,000,000 and bought $227,000,000. The 
United States was China's best customer in 1920. The 
square deal and open door, it is hoped, has removed the 
peril of Japan's "sphere of influence" or Japan's "Monroe 
Doctrine of the far east," and gives to the merchants of the 
United States an equal opportunity with other nations to 
sell to China. 

China has suffered financially and economically be- 
cause she has not been permitted to handle her own tariff. 
In 1920 China's customs receipts were only $94,000,000 on a 
five per cent basis permitted by treaty nations and based on 
prices ruling between 1912 and 1916. The public debt of 
China is estimated at $1,886,641,000, of which $1,644,000,000 



* The nine-power treaty of 1922, signed by the United States, Belgium, 
Great Britain, China, France, Italy, Japan, the Netherlands and Portugal, relates 
to the principles and policies to be followed in matters concerning China. 



[154] 



Economic Consequences of the Arms Conference 

is foreign indebtedness. Increased import duties will bring 
increased revenues and help China's industries. It may not 
be generally known that China has cotton and woolen mills, 
iron and steel institutions of large proportions, also silk 
manufactories. The Arms Conference has started China on 
the road to economic prosperity, perhaps independence, 
provided she will establish a stable government of her own. 
In this, the whole world will share. 

President Harding well said that ''the faith plighted 
here today, kept in national honor, will mark the beginning 
of a new and better epoch in human progress." The 
economic effect of this faith will bear fruit only as the 
nations approach the problems involved from a spiritual 
angle. A ''new and better epoch in human progress" can 
come only as the nations cement a material pledge with a 
spiritual conviction. The four-power treaty will be bene- 
ficial only in so far as the four nations interpret economic 
and political conditions by the sign of spiritual welfare. 
A limitation of armament will make lighter the burdens and 
sorrows of mankind only as it will bring a better under- 
standing and a more peaceful purpose. 

In his speech on the need of limitation in naval arma- 
ment. Senator Borah said: "Milton with his unfettered 
imagination, could not picture the paradise regained should 
these great powers sincerely and unreservedly summon their 
force to this great achievement. Dante could not paint the 
hell which awaits an overburdened, discouraged and tor- 
tured world, if these nations turn from this task, and take 
up again the old, beaten and bloody paths leading to war 
and bankruptcy. The key to the w^orld's peace lies here." 



[155] 



CHAPTER XX 

The Monroe Doctrine 

IT IS an open secret that since the end of the world war in 
1918 a school of economic and political thought has devel- 
oped insisting that the Monroe Doctrine was abandoned when 
the United States entered the war; or as Professor Hiram 
Bingham puts it, is an "obsolete shibboleth." In an address 
in London Ambassador Harvey, replying to certain criti- 
cisms, said that the ''arms conference in Washington is no 
more a challenge to the League of Nations than to the Monroe 
Doctrine." Did he mean by this that it was a challenge to 
both or a challenge to neither ? 

Much has been written and spoken about the Monroe 
Doctrine. The late Edward J. Phelps, once Ambassador to 
England, said every leading statesman had attempted to 
define the Monroe Doctrine, but ''no two of them agree." 
This may be extravagant, but certainly it is true that recur- 
ring misapprehensions as to the underlying principle of that 
famous doctrine have met with unfavorable comment, not to 
say open opposition. Is the doctrine in danger? Has it out- 
lived its usefulness ? 

What is the Monroe Doctrine? Former President Taft 
says "it is a policy not an obligation of international law; 
it does not contemplate interference with the self-development 
of any Central or South American country; it has promoted 
the peace of the world ; its extent is a matter of our American 
judgment. We are concerned that their (South American) 

[156] 



The Monroe Doctrine 

governments shall not be interfered with by European gov- 
ernments; that this hemisphere shall not be a field for land 
aggrandizement, and the chase for increased political power 
by European governments such as we have witnessed in 
Africa and in China and in Manchuria ; and we believe such 
a condition would be inimical to our safety and interests 
.... It is said the doctrine rests on force. That is true, if 
its enforcement is resisted. Its ultimate sanction and vindi- 
cation are in our ability to maintain it ... It is a national 

asset for those who would promote the peace of the 

world. If abandoned, a situation would be created much 
more dangerous to the peace of this hemisphere than our con- 
linued assertion of the doctrine properly understood and 
limited.'' 

The late President Roosevelt declared the Monroe Doc- 
trine gives the United States *'no sovereignty over South 
America; does not prevent the collection of debts, provided 
there is no attempt to take over the ownership of the territory. 
The doctrine is not a part of international law, but a funda- 
mental feature of 'Our foreign policy. When we announce 
such a policy as the Monroe Doctrine, we thereby commit 
ourselves to accepting the consequences of the policy. We 
mean what we say and are prepared to back it up, to recog- 
nize our obligations to foreign peoples no less than our rights. 
It is in no wise intended as being hostile to any nation of the 
old world; has nothing to do with commercial relations of 
any American powers. It is a watchful vigilence "on the part 
of America. ' ' 

Mr. Elihu Root says: ''We wish for no victory except 
those of peace ; for no territory except our own ; for no sover- 
eignty except the sovereignty over ourselves. It (the Monroe 
Doctrine) is founded 'on the right of every state to protect 

[157] . 



Unto The Hills 

itself by preventing a condition of affairs against which it 
will be too late to protect itself; it does not cause the funda- 
mental conflicts in national interests that lead to war; but 
secures to America important strategic advantages should it 
become necessary to battle for our national defense." 

Senator Lodge said in 1916 : "They speak of the Monroe 
Doctrine as a foreign policy. It is not a foreign policy ; it is 
mere law of self-preservation. We wish to be at peace and 
we wish to be secure. ' ' 

The two Hague agreements of 1899 and 1907 contained a 
reservation inserted by the United States Senate declaring 
against departing "from its traditional policy of not enter- 
ing upon, interfering with or entangling itself to the political 
questions or internal administration of any foreign state, 
or relinquishment by the United States of America of its tra- 
ditional attitude toward purely American questions." The 
whole world knew that this meant the Monroe Doctrine. 

Has the Monroe Doctrine been extended beyond the ori- 
ginal intention of its f ramers ? Some say it has ; and there may 
be ground for this assertion. It is generally conceded that 
Secretary of State Olney in 1895 went beyond the limit of 
American public opinion when he declared that "today the 
United States is practically sovereign on this continent, and 
its fiat is law upon the subjects to which it confines its inter- 
position. ' ' 

Secretary Root did much to explain the real American 
doctrine and to dissipate the "false conception" "of that 
American policy. He said the mischief was done by those 
who could not distinguish between "clamors for national 
glory" and "a sense of national duty." In meeting this 
same situation John Barrett said in 1916: "The Monroe 
Doctrine is just as necessary today as in 1816 ; Latin America 

[158] 



The Monroe Doctrine 

does not object to the Monroe Doctrine but to its interpreta- 
tion. If haphazard interpretation can be supplanted by 
responsible and reasonable judgment, the majority of argu- 
ments against it, describing it -obsolete, will fail absolutely/' 

Perhaps the most eloquent and sane illumination of the 
Monroe Doctrine as understood in America, is the statement 
of the late President James B. Angell of Michigan University 
in an address at Harvard University in 1915. ''Standing 
here," he said, "on the ground made sacred by the presence, 
the life, the teachings of that great Harvard statesman, John 
Quincy Adams, to whose matchless courage and far-sighted 
wisdom we owe the declaration which we all call the Monroe 
Doctrine, but which might more justly be called the Adams 
Doctrine, I for one can not understand how any American 
citizen, and especially how any Massachusetts man, can recall 
except with a thrill -of gratitude and admiration, that the 
brave Secretary of State was able to inspire the slow-going 
and lethargic President to fling out the challenge of 1823. 
James Monroe held the trumpet, but John Quincy Adams 
blew the blast. The notes have never died upon the air. ' ' 

The so-called Lodge resolution of 1912 declaring the occu- 
pation of any harbor or other place on the American continent 
for naval or military purposes constitute a matter of "grave 
concern," was pronounced by some an enlargement on the 
Monroe Doctrine. It will be recalled that an American 
company was about to sell a large tract of land on Magdalen 
baj^, Mexico. Senator Knox interpreted the project "as 
inimical to American interests." In defending the resolution 
Senator Lodge said the justification is "on much broader 
and older ground than the Monroe Doctrine — on the accep- 
ted principle that every nation has a right to protect its own 
safety; and, if it feels that the possession of any given 

[i'59] 



Unto The Hills 

harbor and place is prejudicial to its safety, it is its duty and 
right to interfere." Mr. Taft said ''this is not an enlarge- 
ment of the Monroe Doctrine; it only calls special attention 
to an indirect way by which it can be violated. ' ' In this con- 
nection it is interesting to recall that Professor Hart says 
''the Monroe Doctrine is as good against Asia as against 
Europe." However, the Lodge resolution caused a stir, 
particularly in the Orient and the far east. 

Thus the Monroe Doctrine, up to the close of the world 
war, was a bulwark of American independence. It was a 
part 'of the great doctrine of self-preservation. In times of 
international strain, America has turned instinctively to it 
as the basic principle of our foreign policy. It came down 
from Washington's farewell address and Jefferson's "no per- 
manent foreign entangling alliances." Its mission has been 
"the protection 'of American interests" and the "keeping 
alive the flame of liberty." 

While there have been differences as to the doctrine's 
applicability to different situations, there can be little doubt 
that America has always regarded a palpable violation as an 
unfriendly act. It has saved America from the dangers 
menacing the destiny of the United States. Around it has 
been woven historic glam-or, American idealism and pride 
of achievement. 

Has the world war and its results changed all this? 
Are we facing the abandonment of the Monroe Doctrine? 
Are the problems of the far east — the "open door" and 
"special Japanese interests" threatening the American doc- 
trine? Are we willing to act west as we require others to 
act east of us? Is the "open door" a contradiction of the 
Monroe Doctrine, as some claim? These are important and 
vital questions. What is the setting of the picture today? 

[i6o] 



The Monroe Doctrine 

In September 1899, Secretary -of State John Hay sent 
instructions to the six nations having special interests in 
China obtained by treaty and lease, urging mutual co- 
operation (1) not to interfere in any treaty port or vested 
interest within any sphere of influence or leased territory; 
(2) agreeing to no tariff discrimination; (3) no discrimin- 
ating harbor dues or railroad charges. Its purpose was un- 
trammeled development of commerce and industry in the 
Chinese Empire. All the nati-ons agreed to this ''open door'* 
policy. Secretary Knox's failure to secure international neu- 
trality of the Manchurian railway suggests that the ''open 
door" was shut, often. 

The "open door" commercially dates back more than a 
century, to the days of "clipper ships" and tales of oriental 
riches. This was in 1784. In 1898 Europe entered the field, 
then Japan, and today the "Monroe Doctrine" and the "open 
door" stand face to face. Japan obtained Korea, and now 
with Shantung, has what she calls a "sphere of influence.'* 
Under the terms of the four-power treaty Japan agreed to 
retire from Shantung; but the spirit of her "sphere of in- 
fluence" remains. On the other hand the United States main- 
tains that the "open door" simply means equal opportunity 
under the "most favored nation" rule. It is denied that 
America is the god-father of China, but is endeavoring to 
preserve the independence and integrity of that power, and 
her safety from partition after the manner of Poland. It is 
claimed t-o be purely altruistic and economic. 

Japan 's original program, apparently, was revealed when 
Former Secretary of State Lansing appeared before the 
Senate Committee on Foreign Affairs in July 1919, and il- 
luminated the Lansing-Ishii agreement of November 1917. 
Mr. Lansing explained that the agreement was made "to 

[i6i] 



Unto The Hills 

reaffirm the open door policy -on the ground that reports 
were being spread as to the purpose of Japan to take advan- 
tage of the situation created by the war, to extend her in- 
fluence over China: — her political influence. '* 

Mr. Lansing testified that Viscount Ishii suggested the 
use 'of the words ''Japan's special interests" in the far east, 
and urged that there should be a "Monroe Doctrine for the 
far east." Mr. Lansing admitted that he feared Viscount 
Ishii and Japan understood "special interests" to mean "per- 
manent interests." In his note to the Japanese Ambassador, 
Mr. Lansing stated "the United States recognizes Japan has 
special interests in China." 

The colloquy between Mr. Lansing and several Senators 
on this delicate and important matter is interesting and illum- 
inating It reveals Japan's state of mind concerning the 
American doctrine and a possible "Monroe Doctrine of the 
far east. ' ' 

Not entirely disassociated with this matter was the famous 
Anglo- Japanese treaty,^ under the terms of which England 
and Japan agreed to go to each other's assistance "if an 
unprovoked attack or aggressive action on either occurs. ' ' In 
case of a war on either by a third nation, England and Japan 
"will conduct the war in common and make peace in mutual 
agreement," The avowed purpose of the treaty was "the 
consolidation and maintenance of peace in eastern Asia or 
India." England had Japan's support in India and Japan 
had England's offensive and defensive backing in the new 
relations which Japan occupied toward Asiatic countries. This 
alliance Avas viewed as a menace to American interests and 
possible fertile ground for the growth of a Monroe Doctrine 



1 See page 153. 

[162] 



The Monroe Doctrine 

of the far east followed by the dominance of Japan on the 
Pacific. The Anglo-Japanese treaty was supplemented by 
the four-power treaty under the terms of which the United 
States joins with Great Britain and Japan to mutually main- 
tain and protect existing political and territorial conditions 
among all the islands of the Pacific owned by the four powers. 
This is the delicate situation involved in the far east problem. 
Opinions differ as to whether the four-power treaty is a 
benefit or a detriment to American interests, whether it points 
to peace or war. Time alone will tell. 

Obviously America must enforce the Monroe Doctrine or 
abandon it. Abandonment seems impossible, at least un- 
popular. Such a course would arouse public sentiment as it 
was aroused in 1919 when the doctrine was overlooked in the 
original draft of the Covenant of the League 'of Nations, and 
protected in a half-hearted way after protests from patriots. 

Can a Monroe Doctrine of the far east exist in harmony 
with the policy of the "open door?" Japan is a member 
of the League of Nations which guarantees against "external 
aggression, the territorial integrity and existing political 
independence of its members." Will this be the Monroe 
Doctrine of the far east and will it be upheld by the European 
and South American members of the League? Will it serve 
Japan's purpose? 

What will be America's attitude in such a situation? Is 
the American doctrine in danger in the face of present prob- 
lems ? Will it give way to what Former President Wilson at 
Mobile in 1913 called "a spiritual union?" Will the moral 
factors which have sustained the Monroe Doctrine in the past 
be sufficient to sustain it in the future? Is it true that the 
doctrine is as strong as our army and navy? If so will it 

D163] 



Unto The Hills 

disappear if our army is reduced below that of other powers, 
and our navy is scrapped ? Will national disarmament mean 
the death of the Monroe Doctrine ? These are questions the 
future must answer. 



[164] 



CHAPTER XXI 
Whts" Political Parties? 

IT CAN not have escaped the attention of observant 
citizens that an ever-increasing wave of ** non- 
partisanship ' ' is sweeping over the country. It is the reflex 
action of ''internationalism," and has confused American 
political thought and threatened the continuance of political 
parties ; it has imperiled the national barriers of protection. 

Everywhere the question is raised by these "non- 
partisans: "Why do we have political parties?" "Are they 
necessary?" "Are they not more injurious than benefi- 
cial?" "Can not the welfare of society be promoted better 
without them ? ' ' 

It is well known that in all "civilized" nations there are 
two great political parties. Their essential difference is 
the same everywhere. Both have their origin in the two 
fundamental tendencies of mankind — the one to improve 
what is, the other to preserve what is. Both are essential 
to sane and safe progress, for progress among men as well as 
among nations moves onward midway between the two 
extremes of construction and destruction. Life is both con- 
structive and destructive, and what endures is the resultant 
of these forces. In the department of life we call social and 
political, the same rule pertains. Progress in political 
organizations is the result of an irrepressible conflict. This 
conflict germinates political parties; and in all countries 
they are known as "progressive" and "conservative 

[165] 



yy 



Unto The Hills 

They stand for the two opposing forces or principles at 
work always. 

It is unnecessary to devote space to prove that in all 
ages and in all social organization, humanity has progressed 
along differentiating lines. Mankind has advanced because 
of fundamental differences. Separation has been the moving 
force of the world. 

When the colonies separated from Great Britain, there 
were two great political parties in England — Whig and 
Tory. It was perfectly natural, nay necessary, that the 
colonists should divide in their political thought and 
opinion along the lines laid down in the countries from 
which they came. 

Back of the gigantic struggle between Hamilton and 
Jefferson were two great principles — principles upon whose 
correct interpretation and development were to depend the 
existence and the welfare of the Kepublic. Both of these 
great men were party men, and it was fortunate they were; 
otherwise they never could have brought the new nation to a 
full realization of the far reaching principles involved — prin- 
ciples which were thought settled in 1865, but which reappear 
even now. 

Hamilton was a firm believer in political parties. In 
the Federalist (No. 26) Hamilton said: "Parties must exist 
in all political bodies and are of great service in attracting 
public attention whenever the majority or the opposition 
appears disposed to exceed its proper limits; so that the 
people warned of the danger may take measures to guard 
against it." To Hamilton's genius for government and 
clear insight into the purposes of the Constitution, the 
people of the United States owe a debt of gratitude they 

[i66] 



''■i''Si:(:^k'-'. r «".' 





Why Political Parties? 

can not pay. Yet Hamilton would have failed but for the 
cohesive power of party. 

Thomas Jefferson was even more strongly a party man. 
His great principles embodied in the Declaration of Inde- 
pendence never would have been vitalized without the 
instrumentality of party. In his voluminous correspondence 
may be found these sentences: ''I am no believer in the 
amalgamation of parties, nor do I consider it as either 
desirable or useful for the public. Parties are censors of 
the conduct of each other, and useful watchmen for the 
public. In every free and deliberating society, there must, 
from the nature of man, be opposite parties. Wherever there 
are men, there will be parties; and wherever there are free 
men they will make themselves heard. Where the principle 
of difference is as substantial as in this country, I hold it as 
honorable to take a firm and decided part, and as immoral to 
pursue a middle line as between the parties of honest men 
and rogues, into which every country is divided. ' ' 

In laying the foundation for the government of an 
empire, diversity of views would be expected. Influences 
wer^ everywhere at work creating opposing forces. The 
Government was organized on a plan novel in character 
and well calculated to create diversity of opinion relative 
to the details of its administration. Parties came and dis- 
appeared, but the great underlying principles which brought 
them into being, remained. 

The constant ebb and flow of public opinion as expressed 
in parties made possible the survival of what was best for 
all — what was needed to promote the highest welfare of the 
country and the well-being of the people. Even Andrew 
Jackson's appeal ''to destroy the monster party" was 

[167] 



Unto The Hills 

followed by his removal of all Federal office-holders and the 
appointment of Democrats. Nevertheless Jackson, although 
inconsistent, was a party man, and as such was able to de- 
nounce nullification and declare for a strict obedience to 
Federal law. He was a nationalist to the marrow. 

The enemies of political parties not infrequently point 
to Monroe's "era of good feeling" as proof that parties are 
not necessary. Yet this era did not witness the disappear- 
ance of parties. Interests of national magnitude were 
incubating, all evolving a difference of opinion which re- 
sulted in the reorganization of parties and the mightiest 
political party struggle the nation ever saw. The shifting 
springs of public thought and opinion brought forth new 
alignments, new parties. The demands of people created 
new leaders, new parties. 

It is strictly true that the nation could not have been 
saved from disunion except by the spirit of party. The 
cohesive patriotism of the times necessarily resulted in a 
new party on the one side, while the fixed boundaries of an- 
other line of thought made more stubborn a party on the other 
side. It was a tremendous sacrifice of life and treasure, 
yet *'the irrepressible conflict" and the triumph of the 
Union completely justified parties. 

Webster rose to the sublime heights of partisanship in 
1830 when he said: ''I am a Unionist, and in this sense a 
National Republican." He struck the highest note of 
patriotic partisanship when he said in reply to Hayne: 
*' Liberty and Union, now and forever, one and inseparable." 

Lincoln was eminently a party man. In his speeech at 
Springfield, Illinois, on June 16, 1858, he said: ''Our cause 
must be intrusted and conducted by its own undoubted 
friends. Two years ago we formed and fought the battle 

[i68] 



Why Political Parties? 

through. Did we brave all to falter now? The result is 
not doubtful. We shall not fail." 

Lincoln stood on and was elected on a platform which 
declared that "the last four years have fully establisijed the 
necessity of the Republican party." Lincoln appealed to 
and won through, the party spirit. 

S. S. Cox, for many years a leading Democratic member 
of the National House of Representatives, devoted a whole 
chapter in his book ''Three Decades" to " party creeds 
and modes." 

Cleveland, twice President of the United States and a 
patriotic American citizen, was a pronounced partisan and 
party man. Among his speeches may be found the following 
sentiments: "Interest yourselves in public affairs as a duty 
of citizenship. I am very much pleased to learn that the 
League of Democratic clubs in New York intends to make 
the organization permanent agencies for spreading and 
illustrating the doctrines of the Democratic party. Parties 
are but the instruments through which the people work 
their will. The time-honored doctrines of the Democratic 
party are real to me." "I am a Democrat," the words he 
spoke at Albany, July 29, 1884, left no doubt that he was a 
party man. 

Garfield was a strong party man and a proud patriot. 
Among his many brilliant sayings may be found these : 
"Political parties, like poets, are born, not made. While it 
is true that no party can stand upon its past record alone, 
yet it is also true that its past shows the spirit and 
character of the organization, and enables us to judge 
what it probably will do in the future. The Democratic and 
Republican parties are examples of the genuine and natural 
method of organized political parties. Organizations may 

[169] 



Unto The Hills 

change or dissolve, but when parties cease to exist, liberty 
will perish. The thing most desired is not how to avoid 
the existence of parties, but how to keep them within proper 
bounds." 

Blaine, McKinley and all the great leaders of public 
thought in their day, were strong party men. The two most 
prominent witnesses to summon in defence of the spirit of 
party and in opposition to the prevailing wave of "non- 
partisanship," are former President Wilson and the late 
President Roosevelt. From the two leading representatives 
of the two leading schools of political thought, from the 
political antagonisms of that period may be gathered 
powerful lessons. In his treatise on ' ' Constitutional Govern- 
ment" Woodrow Wilson says: "They (political parties) 
are absolutely necessary to hold the things (in the govern- 
ment structure) thus disconnected and dispersed, together, 
and give some coherence to the action of political forces. 
That exterior organization is the political party. Parties 
get their coherence and prestige, their rootage and solidarity, 
their mastery over men and events, from their command 
of detail, their control of the little tides that eventually 
flood the great channels of national activity. Whatever 
their faults and abuses, party machines are absolutely 
necessary under our existing electoral arrangements. ' ' 

In his work on "Congressional Government" Woodrow 
Wilson says: "It seems to be unquestionably and in a high 
degree desirable, that all legislation should distinctly repre- 
sent the action of parties as parties. I know that it has been 
proposed by enthusiastic, but not too practical, reformers, 
to do away with parties by some legerdemain of govern- 
mental reconstruction, accompanied and supplemented by 
some rehabilitation of the virtues least commonly controlled 

[170] 



Wht/ Political Parties? 

in fallen human nature ; but it seems to me that it would be 
more difficult and less desirable than these amiable persons 
suppose, to conduct a government of many by means of any 
other device than party organization." 

In his book on ''American Ideals" the late Theodore 
Roosevelt said: "A machine politican really desirous of 
doing honest work on behalf of his community, is fifty 
times as useful as is the average philanthropic outsider. 
No good work can be done without an organization. Under 
the American system it is impossible for a man to accomplish 
anything by himself; he must associate himself with others, 
and they must throw their weight together." 

In his address before the Republican National Conven- 
tion at Chicago, on June 21, 1904, Elihu Root said: "The 
practical governing instinct of our people has adopted the 
machinery desired, by the organization of national parties. 
In them men join for the promotion of a few cardinal 
principles upon which they agree. The people do not choose 
between men; they choose between principles — ^between the 
principles they profess. A great political organization is a 
growth — with traditions and sentiments reaching down 
through struggles of years gone." 

Woolsey, the great Constitutional authority, says: ''Our 
parties were the results of our Constitution and the great 
differences of interests. The Federal Union needed all the 
energy and ability lodged in the upright Federal party." 

Francis Lieber in his work on "Civil Liberty," says: 
"The majority is protected by the principals of parties — 
or government by party. Those who agree on the most 
important principles will unite and must do so in order to 
be sufficiently strong to do their work. Without party 
administration it is impossible that the majority should rule. 



Unto The Hills 

Liberty requires a parliamentary government, and no 
parliamentary government can be conceived of without the 
principle of party administration." 

Francis Curtis in his history of the Eepublican party 
says: ''They (the people) have believed they could best 
serve not only their party's but their country's best inter- 
ests by remaining true partisans. A man can not reform a 
party by working outside. Party organization and party 
leadership must and will continue." 

To say that the great issues of the day ''transcend 
political parties" is to admit the impotency of Government 
and the failure -of a representative Eepublic. The greater 
the issues the greater the necessity of political parties. It 
is the only method of co-ordinating and vitalizing any great 
issue. It is the way to give expression to public thought 
and translate that thought into action. 

Let us apply the principle of "non-partisanship" and 
"no parties" and see how it would work. Article II, Sec- 
tion 3 of the Federal Constitution as originally framed, 
provided that each state shall appoint the electors and that 
the electors shall meet and vote for two persons. The person 
having the greatest number of votes shall be President "pro- 
vided he shall have a majority of the whole number of 
electors." After the choice of President, the person hav- 
ing the second greatest number of votes of the electors shall 
be Vice-President. 

The danger of electing a President and a Vice-President 
of two different parties, caused the Jefferson party in 1802 to 
put through an amendment to the Constitution (Amendment 
XII) to provide that the electors should vote for one man for 
President and another man for Vice-President. Party de- 
velopment dictated this. 



Why Political Parties? 

Suppose all parties and party conventions were abol- 
ished. Presidential electors must be chosen. How? *'In 
such manner as the legislatures may direct." There might 
be 48 different methods. How would it be possible for the 
electors to agree upon candidates? How could the electors 
give a majority of their votes to any one man? Such a plan 
would be impossible of operation. It would result in chaos. 
It is clear there must be some preliminary machinery to con- 
centrate public opinion and action. 

Admitting the need of majorities, there must be minor- 
ities. To ascertain what is the majority and what the minority, 
there must be conventions and primaries. They are essential 
parts of self-government — of representative Republics. 

To plead "neutrality" and *' non-partisanship " is to 
occupy a wholly false position, to invite political and govern- 
mental disorganization. It is the weapon of those unable 
to comprehend the genius of American institutions, unwill- 
ing to perform their civic duties, and unworthy any great 
trust. 

If there ever was a time when political parties were 
needed, it is now. Partisanship is the only pathway to social 
unity and national safety. A man or woman without a party 
is like a man or woman without a country. It is not so much 
**what" party as ''some" party. A neutral is not only 
negatively useless but positively dangerous. The men and 
women who have built America have recognized the necessity 
of political parties and acted through them. 

While it is true that a p'olitical party has no charted 
rights and can not gain the right of way, it is true also that 
the civil -obligations of the citizen to his country can be exer- 
cised more effectively through a political party. Such an 
organization is for the public good and the general welfare, 

[i'73] 



Unto The Hills 

•otherwise it has no excuse for existence. Political parties 
must represent great principles, else they are built upon the 
sand. They are outside the Constitution and wholly volun- 
tary, a body of men and women united for promoting some 
particular principle to which they are all agreed. 

Is party government breaking down? If so there is 
peril right ahead. Pure democracies have been tried and 
found wanting. A representative Republic like the great 
American experiment, occupies a middle ground between an 
autocracy or oligarchy on the one hand, and a pure democracy 
on the other. Political parties are the machinery required to 
make not only a Republic but any civilized nation, function. 

The system of political parties is a growth, an evolution. 
It has its weaknesses but will remain until something better 
?s devised. Often parties are abused by unscrupulous leaders, 
and lose their m-oral and spiritual power. The Whig party 
collapsed because its leaders compromised with a great evil, 
and failed to vision a vital and spiritual issue. If the great 
political parties now living, disappear and die, it will be 
due to their loss of moral and spiritual principles. But other 
parties will rise to take their places, for political parties are 
essential to the life of the Republic. 

The independent -or ''Mugwamp" in American politics 
first appeared in 1872. It is an Indian name and signifies 
* ' chief or great man ; ' ' and in 1884 was applied in derision to 
those who refused to vote with their party. However high- 
minded independents may be, they accomplish little; in fact, 
usually accomplish the very thing they are fighting, the tri- 
umph of their ancient political enemies. As in religious, 
educational and all other human organizations, so in political 
organizations, the only effective reform usually must be 
wrought within the organizations themselves. There are ex- 

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Whi/ Political Parties? 

ceptional cases, arising out of great crises when an entirely 
new party is the only alternative. 

It is useless for independents or so-called ''Mugwamps" 
to find fault with our present party system, with public offi- 
cials, and at the same time refuse to vote either in a caucus, 
primary or an election. No government can rise higher than 
its source, the people. If the people neglect their civic duties 
and evil follows in party and national life, it is the fault of 
those who fail to vote. The independent or ''Mugwamp" is 
a useful citizen only as he performs his civic duties and acts 
collectively with his fellow citizens. 

If the party system is at a low level, if national legisla- 
tion is not up to a high standard, the fault is not with the 
primaries, not with the party system, but with the right- 
thinking, high-minded and intelligent voters who either fail 
to vote or take no part whatever in public affairs. Our party 
system is essential and will endure. It will bring good or evil 
in proportion to the intelligent and unselfish interest the voters 
themselves show in the great task of self-government. So- 
called ''non-partisanship" is a snare and a delusion, will re- 
sult in evil days and national decay. A ''non-partisan" is a 
"non-American;" and a " non- American " is an undesirable 
citizen. America will wax strong under intelligent and 
broad partisanship, or grow anaemic under flabby "non- 
partisanship." Moral and spiritual power come only to those 
whose vision is on the hills. 



[I7S] 



CHAPTER XXII 

Congress 

IT IS significant that of the three branches of the govern- 
ment enumerated in the Federal Constitution, the first 
mentioned is the legislative branch. ''All legislative powers 
herein granted ' ' recites the very first section of that immortal 
instrument, ''shall be vested in a Congress of the United 
States, which shall consist of a Senate and House of Eepre- 
sentatives. ' ' Then the instrument outlines the machinery of and 
qualifications for both houses, until section eight is reached 
reciting in eighteen sub-sections, the specific powers of Con- 
gress. Section nine recites certain prohibitions against 
Congress, while section ten recites a few prohibitions against 
the states. 

Answering many of the objections raised to the proposed 
election of representatives, a writer in the Federalist made 
these wise observations: "The persons who shall be elected 
representatives must have all the inducement to fidelity, vigi- 
lance, and a devotion to the interests 'of the people, which 
can possibly exist. They must be presumed to be selected for 
their known virtues, and estimable qualities, as well as for 
their talents. They must have a desire to retain and exalt 
their reputation, and be ambitious to deserve the continuance 
of that public favor by which they have been elevated. There 
is in every breast a sensibility to marks •of honour, of favor, of 
esteem, of confidence, which apart from all considerations of 
interest, is some pledge for grateful and benevolent returns." 
This faith was well-founded. 

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Congress 

Theoi:etically, the Senate has been ''a most important and 
valuable part of the system, and the real balance wheel which 
adjusts and regulates its movements." Furthermore it is sig- 
nificant that in the Federal Constitution the House of Rep- 
resentatives is mentioned first. Congress was the name adop- 
ted to mark the two branches of the legislature, which were 
named the ''House of Representatives" and the ''Senate." 
A.fter years of experience and history reference, many today 
d'O not distinguish between the word "Congress" and the 
words "House" and "Senate." A member of either the 
House or Senate is a member of Congress; but to say that a 
person is "a member of Congress" is to fail to distinguish 
between the two branches. Officially, a person is either a 
•'Representative" or a "Senator." 

No subject has been more discussed and adjudicated than 
the "powers of Congress." The interpretation of the Con- 
stitution in respect to these delegated powers was far more 
important than the Constitution itself; and it was fortunate 
that the early decisions of the Supreme Court Judges, es- 
pecially John Marshall, laid the foundations broad and deep. 

When we take a survey of the century and a half, nearly, 
covering the life of the American Congress, we are amazed 
at the wisdom, the patience, the vision of the leaders in the 
halls of legislation. Out of the clash of sectional jealousy, of 
selfish interests and personal ambition, there comes a clear 
outline of the purpose of the actors in that great national 
drama. "Liberty" and the "people" were the two words 
with which they conjured ; and Congress, more especially the 
House of Representatives, was the hope of all. It is very 
doubtful whether the framers of the original Constitution 
ever dreamed of the changes time and experience would work 
in magnifying the power of the courts and the executive. 



Unto The Hills 

Congress was the central thought upon which public atten- 
tion was riveted. 

Fundamentally, Congress was intended to be the corner 
stone of the Republic. It was, as one historian says, ''meant 
to be a reformed and properly regulated parliament." But 
soon it was more than that ; it was the key to the whole arch, 
checked only by the Supreme Court of the United States; 
and even there, many contended, and contend today, that the 
judiciary has usurped the power and authority of Congress. 

Possessing such vast powers. Congress drew to itself 
strong men in both branches. It was an honor to be chosen to 
either branch, and in the early days a higher honor to be 
chosen a Representative, manifesting popular favor and su- 
preme intimacy with the people themselves. In the minds of 
the people jealous of their rights, the Senate was looked 
upon as somewhat removed from popular sympathy, and, in 
a measure remote from the heart of things. It was viewed 
rather as a oounselor of the President, the source of wisdom 
in a mysterious cloister. In the early days a ''Member of 
Congress" was a member of the House of Representatives 
only; Senators belonged to a distinct and separate organ- 
ization. This idea pertains somewhat now. 

The Senate represented states, and there was much jeal- 
ousy between the large and the small states. The House of 
Representatives stood for numbers and population, and all 
communities or districts had power in the House by reason of 
the "strength of numbers." Here the individual was on an 
equality and liberty had a square deal, according to the popu- 
lar notion. It was a representative form of government, dig- 
nified and somber in the Senate, rapid-firing and intensely 
human in the House of Representatives. 

For more than a century the power of Congress within 

[178] 



Congress 

its Constitutional limitations, was supreme. Its record was 
brilliant and unique in the annals of time. A search of the 
records from the first Congress to the end of the Civil "War, 
reveals a period of intellectual and national development 
dominated by Congress. The powerful debates in both 
branches, the clash of opinions presaging the clash of arms, 
told of the irrepressible conflict staged in the halls of legisla- 
tion. Congress was the first battle-ground, and Congress was 
the last, even after Appomatox. Congress was the scene of 
reconstruction, the background of a reunited Republic. From 
the close of the Civil War, Congress was the arena of mighty 
intellectual gladiators. There were the battles of political 
parties, of principles also. It was an honor to fight -on either 
rdde; it was an honor to be a Representative or a Senator. 

Now come those who talk of ''The Decline of the Amer- 
ican G^overnment" and gradual weakening of the Nation's 
governmental structure by an undermining of the Constitution 
and sweeping away of party responsibility. Is it true that 
"in the public mind the legislative branch of our national 
government probably never has been at lower ebb than it is 
today r' 

While it maj^ be a popular fad to find fault with and 
criticise Congress, the habit is not new. It began with the 
first Congress, and has continued ever since. In a democracy 
or rather a representative Republic, it is natural to throw 
bricks at our public officials. This unfortunate pastime, how- 
ever, is not confined to the United States ; it prevails wherever 
there is a government of men. It arises both from party strife 
and that human weakness known as jealousy. This habit does 
not appear to be sufficiently serious, however, to warrant the 
conclusion that the pillars of the Republic are falling. 

Is there a growing tendency to weaken the Constitution 

[179] 



Unto The Hills 

by electing Senators by a popular vote, or nominating both 
Representatives and Senators by primaries ? This is a matter 
for debate, upon which much may be said on both sides. The 
people have amended the Federal Constitution so that all 
Senators are now elected, not by the legislatures of the states, 
hut by popular vote of the people. Obviously the cause was 
the apparent abuse of legislative elections. It was claimed 
that money and corruption characterized elections of United 
States Senators by legislatures, and that the system weakened 
state legislatures by determining the selection of legislators 
not by ability and fitness but by loyalty to a certain candidate 
for United States Senator. Whatever truth may lie in this 
indictment, the fact remains that now under a popular elec- 
tion system, none but the very rich can possibly be candidates 
for Senator. If a poor man starts in the race, it is morally 
certain he has a rich man or men back of him. No law can 
effectually put a stop to the expenditure of money; yet the 
people will not discard the primary system. If Congress 
has deteriorated, it is not because of the primary system. 

From all indications the '' initiative and referendum'* 
has not materially weakened the American system of govern- 
ment, because it has not been tried to any extent. Obviously 
the people as a mass can not legislate ; it is not practical. A 
referendum, however, is practical and is tried repeatedly in 
business as well as political organizations. The alleged ''de- 
cline of the American government" is not due to either the 
initiative or referendum. 

There is some truth in the charge that the country and 
Congress are drifting into "blocs" or groups measured by 
callings or respective material interests. This is really the 
soviet system, and will, if persisted in, undermine government 
by parties. It should be apparent to all observers that the 

[i8o] 



Congress 

American government must be run by political parties and 
by political party responsibility. Nor does this party respon- 
sibility end with Congress ; it enters the executive departments 
to a very large degree, if there is to be harmony between the 
legislative and executive departments. This is why Civil 
Service has a limit, and should be confined to clerical positions 
only. Policies are shaped by parties in Congress, or should 
be; and the execution of those policies in the departments 
should be in sympathetic hands. 

If there is a tendency towards a breaking down of gov- 
ernment, it is largely due to the breaking down of party 
solidarity and responsibility. The so-called independent and 
** non-partisan" is responsible for this, primarily. When 
(congress is controlled by a political party, it can not func- 
tion properly if its program is shaped and dominated by a 
number of ''non-partisan experts" in the departments and 
elsewhere outside of Congress. In recent years Congress has 
created a number of bureaus or independent departments pre- 
sided over by so-called specialists and experts. Often these 
people are theorists entirely unfamiliar with the practical side 
of business. Members of Congress not infrequently are 
flooded with ' ' expert information ' ' until they are blinded, lose 
sight of the principle and forget the responsibility they owe 
to their party and country. The result is that the government 
is run by bureaus and independent organizations, with no 
responsibility to the people. Often members of Congress are 
robbed of their legislative independence of thought and action, 
by irresponsible outside agencies. 

If Congress has lost any of its former prestige it is due 
also to the fact that ''non-partisanship" has taken possession 
of so many of our citizens. Nothing will so readily wreck our 
government as non-partisanship carried to its logical 

[i8i] 



Unto The Hills 

conclusion. It has obsessed many of our departments and bu- 
reaus, and is getting under the skin of Congress. No member 
of the House or Senate can do good work, unless fully aware 
that he is backed by a solid party organization or a majority, 
and can secure party loyalty. This non-partisanship goes 
back to the district or the state from which the legislator 
comes, disorganizes the machinery of the party, discourages 
active workers and makes the life of a Congressman uncertain 
and miserable. How can a constituency or the people expect a 
Congressman to act rationally and intelligently, if his people 
fly off into "non-partisanship" and do not know what they 
want? 

Since the close of the world war, so many problems have 
come to the front as to confuse if not blind the people, and 
consequently Congress. The business of Congress is the most 
complicated and vast of any business in the world. It touches 
all sorts of subjects and at every angle. It is impossible for 
a member of the House or the Senate to keep in intimate touch 
with all subjects. He must confine himself to one or two, and 
master those. The result is that influential men become spe- 
cialists. This tends to make them narrow, giving the impres- 
sion of incompetency. 

Furthermore, there are so many members of the House, 
and so many varied subjects, that a steering committee is re- 
quired to map out the program and limit debate. This steer- 
ing committee is all-powerful. It is composed of a few men, 
including the Speaker, who dictate the subjects to be taken 
up and the time to be devoted to discussion. Thus the average 
member, whatever his ability may be, has no opportunity to 
debate or discuss. Real serious debate, as of old, is rarely if 
ever seen in the House of Representatives. This gives the 

[1S2] 



Congress 

impression that there are few if any men of outstanding 
ability in the House. 

On the other hand, the Senate^ with unlimited debate, is 
the endless talking machine of Congress. It is deliberative to 
the limit, thus -often ineffective from the popular point of 
view. But even in the Senate, only a comparatively few men 
participate in debate and a few lead, because the program is 
controlled by a steering committee. It must be admitted, 
however, that often debate in the Senate reaches a high level 
of literary and forensic attainment, not unlike the debates of 
long ago. 

Is it fair to charge Congress with failure to function, 
and members of the House and Senate with incapacity, when 
the real trouble is an attempt to break down party solidarity 
and party responsibility? There are many men of great abil- 
ity in both branches of every Congress, who have no opportun- 
ity to show what they can do, because of the ''non-partisan" 
obsession beginning back home and ending in Congress and 
many of the executive departments. 

In the days when Congress was a power, and a member 
of Congress was a badge of honor, there was party solidarity 
and party responsibility. Every big national question was 
a political party question, and members of Congress stood or 
fell on fundamental party questions. 

It is a serious question whether the departure from the 
old days of Reed and Cannon, when the Speaker was power- 
ful, and when there was party and individual responsibility, 
has been an improvement. Since those days, the Speaker has 
lost his power or much of it, no longer helping shape the na- 
tional program, while the President has individually and 
personally entered the sacred precints of Congress and taken 
charge of legislation, to a large degree. Obviously this tends 

[183] 



Unto The Hills 

to lower the prestige, the dignity and the morale, of Congress. 

Historian Woodrow Wilson says in his "Constitutional 
Government :'"' The House seems to have missed what its 
average capacity and its undoubted integrity entitles it to, 
the chief privilege of giving counsel to the nation, the right 

to be its principal spokesman in affairs It has forfeited 

the much higher -office of gathering the common counsel of the 
nation and mellowing the tremendous, the governing and 
sovereign power of criticism." 

The intellectual level of Congress will be no higher than 
the intellectual level of the people who send the members to 
the House and Senate. It is hardly fair to say that this 
level has declined because certain incidental changes have 
been made in the method of selection. There is just as large 
a percentage of brilliant members in Congress today as ever ; 
but because of the system in vogue, the scattered responsibility 
and increasing '^ non-partisanship, " there is no opportunity, 
no spot light in which the individual member may shine. 

There is no "Decline of the American government," only 
a decline of party spirit, party responsibility and party 
efiicieney. 

After the adoption of the Federal Constitution, some one 
asked Benjamin Franklin: "Doctor, have you given us a 
Republic -or a Monarchy?" Franklin replied: "A Republic, 
if you can keep it." Have we kept it? If not, why? 



[184] 



CHAPTER XXIII 
What is Democracy? 

IN AN admirable and patriotic address in the United 
States Senate on *' Peace by Compromise," Henry Cabot 
Lodge said: ''We intend to make the world safe for 
democracy. But what exactly do we mean by democracy?'' 

This is a question saturating the minds of serious and 
thoughtful people who care less for politics and more for 
country. What is meant by the phrase ''making the world 
safe for democracy?" 

There is no word in the English language more misused 
and misunderstood than this much-abused word "democ- 
racy." Born in ancient Greece, it has come down through 
the ages as a shibboleth of the self-seeking and a talisman 
of the unscrupulous. A synonym of the age-long struggle 
of humanity toward what we call civilization, it has well- 
nigh degenerated into a hackneyed word where familiarity 
breeds contempt, almost. 

Solon's democracy in Greece was a failure, ending after 
thirty years of strife, in a tyranny more pronounced than 
ever. Solon's theory was admirable but his machinery 
would not work. However, out of the ruins came one good 
thing, namely an inspiration to a national spirit embodied 
in military glory. Thermopylae and Salamis will stand 
forth always as glorious achievements of democracy. 

Pericles, a child of democracy, was a wise autocrat and 
shrewd statesmen. He carefully concealed the weakness of 
democracy under the cloak of his own unselfishnetes. 

[185] 



Unto The Hills 

Deposed, he was a victim of his own democracy. The age of 
Pericles was renowned not because of democracy, but be- 
cause of the character of Pericles. At his death, political 
and social disease wrought havoc. Democracy was con- 
demned; Solon and Pericles denounced. Socrates was the 
product of democracy, yet he was the victim of his own 
philosophy of government. In short, all the experiments in 
various degrees of democracy were tried at some time in 
ancient Greece; and the Hellenic Empire fell a victim to 
Rome. 

At the height of its glory, when the legions of the 
Caesars stretched from Jerusalem to Britain, the Roman 
people never enjoyed the ''blessings of democracy." 
Viewing the ruins of Hellas, the Romans did not believe in 
democracy. Unbridled democracy derives no comfort either 
from Athens or from Rome. Nor did the Reformation, a 
Parliamentary government or a Republic in the western 
hemisphere, have their origin in democracy. Personal 
liberty from tyranny in all forms was the moving cause. 

The Continental Congress was purely representative. 
There was no thought of democracy. The Revolution was 
fought not to establish democracy, but to establish liberty 
from foreign political and commercial oppression. Thomas 
Paine, who in 1776 turned the scale in favor of the inde- 
pendence by publishing his ''Common Sense," said not a 
word about democracy. Independence was the central and 
controlling thought. The Declaration of Independence says 
nothing about democracy ; in fact the word does not appear 
in the entire document. The original Articles of Confedera- 
tion said nothing about democracy. 

When the Constitutional Convention met in Phila- 
delphia, three facts loomed high and clear : First, a democracy 

[i86] 



What Is Democracy? 

was never, thought of or suggested ; Second, a representative 
Republic was essential ; Third, a strong and powerful central 
government was necessary. Throughout the debates, there 
was no suggestion of a democracy. The thread of a 
Republic ran through the warp and woof of the entire 
instrument. The word ''democracy" does not appear in 
the Federal Constitution. The first article and fourth sec- 
tion of that document recites : ' ' The United States shall guar- 
antee to every state a republican form of government." 

Therefore from the days of Athens in all her glory to 
the hour when the Federal Constitution was framed, more 
than twenty centuries, democracy never prevailed success- 
fully. Political and civil liberty advanced tremendously, 
but always through the instrumentality of representative 
government, and the extension of the right of suffrage. 
The English Reform Bill of Rights gave universal suffrage, 
but it did not make England a democracy. Popular 
sovereignty and universal suffrage in America does not 
make America a democracy. The checks and balances, the 
entire electoral system, run counter to a democracy. The 
steadily widening functions of the Federal government indi- 
cate a purpose to check the evils of too much democracy. 
The United States is, and always was, a Republic, not a 
democracy. 

The French Revolution and immigration to the United 
States marked the beginning of the modern idea of 
democracy in America. Jefferson's party was called the 
''democratic party" in derision, for alleged sympathy with 
the French revolutionists. From that day to the present, 
America has been the scene of political and social controver- 
sies between factions, the one clinging to the form of repre- 
sentative government, the other seeking political power 

[187] 



Unto The Hills 

under the cloak of democracy. The great issue evolved into 
a struggle between national rights and state rights. This 
clash continued until the close of the Civil War, which 
should have settled the question finally whether America is a 
Republic or a democracy; but it did not. 

In recent years the word democracy has taken on an 
entirely new and manifestly exaggerated meaning. In 
popular parlance, it has suddenly become the key to 
humanity's progress and the only hope of the world. The 
magic word ''democracy" is brought forth on the lips of 
master magicians, and employed to fire the imagination of 
the unthinking. The cap-stone of this gorgeous structure 
is the phrase, ''To make the world safe for democracy." It 
set in motion political, social and economic forces that, if 
unchecked, may lead to serious difficulties, if not disaster. 

What is meant by "democracy" in the popular inter- 
pretation and in the public mind? Why is the word 
"democracy" so frequently and so loudly proclaimed to 
the populace ? There is only one explanation — politics. 
The United States did not enter the world war "to make 
the world safe for democracy, ' ' but to save the United States, 
politically, economically and nationally. The struggle of 
the human race has alw^ays been for more liberty and less 
tyranny. Germany desecrated American sovereignty, 
destroyed American lives and defied American authority. 
This meant a return to tyranny, hence the United States 
was forced to fight. Democracy had nothing to do with it. 

All the forces of disruption, all the isms and experiments 
long since tried and exploded, all the nostrums suggested 
by political quacks, have been trotted out under the shelter 
of "new democracy" and "new freedom." Is it not time 
for the Nation to stop, look and listen? Has not the hour 

[i88] 



What Is Democracy? 

for sober, reflection arrived? Powerful forces are at work 
to bring about what is called ''political, social and indus- 
trial democracy." If by political democracy is meant uni- 
versal suffrage and participation in public affairs, we have 
it already, but in the form of a Republic, with representative 
machinery. If by social democracy is meant social equality, 
we should dismiss the thought, for such a thing is impossible 
in any nation or organized society. No frame-work of gov- 
ernment, no law or fiat, can force equality of brains, culture, 
manners or blood. If by industrial democracy is meant the 
ownership in common of all the industries of society, and 
equality in the rewards of toil, it has been tried and failed. 

Powerful forces backed by numbers have been set in 
motion by the careless and too-frequent use of the word 
''democracy." They may overwhelm the Republic if sober 
instruction and education are not undertaken at once. 
These forces are all linked together in a wild endeavor to 
bring about the millenium. We had a "social democracy" 
when the Federal government operated the railroads, the 
telegraphs, the telephones, the express companies, ship- 
building and many other private undertakings. All proved 
expensive failures, and the people are staggering under a 
mountain of debt and taxation due to these experiments in 
"social democracy." 

Now we have the irrepressible conflict between what is 
called "labor and capital," and between "union and non- 
union labor." During the world war, the Chairman of the 
National Labor Board wrote: "We are no longer looking 
with the same capitalistic eyes that we used to. Labor is no 
longer a commodity to be handled in that way. We have made 
the discovery that labor is the flesh and blood of America . . . 
Labor will master the world." This same Board laid down 

[189] 



Unto The Hills 

a national labor policy permitting collective bargaining/ 
which in practical operation means the closed shop. Organ- 
ized labor is in a mighty, a bloody, struggle, to hold what it 
gained under the regime of the National War Labor Board. 
Apparently organized labor seeks to master the government 
in the name of democracy. This is what the leaders pro- 
claim, even though the struggle be at the expense of law 
and order. They forget that force invites force; and the 
force behind government is irresistable in the end. 

A part of the program of ''modern democracy" is a 
proposal to enter some sort of a society or association of 
nations ''to maintain peace." It is said that the United 
States has outgrown its nationality, and that its destiny is 
in a new democracy of the world. Is this the democracy 
we desire? Must we surrender our national spirit and lay 
it on the altar of "new freedom" or "modern democracy?" 
Have the struggles and sacrifices of our forefathers been 
in vain? Is the destiny of the United States to be deter- 
mined by a society of nations ? 

This Republic of ours is passing through a critical 
period, but it is still a Republic, not a democracy. It must 
remain a Republic if it is to survive. Yet a Republic can 
and will do justice to its citizens, reward all for services 
rendered, and correct evils as rapidly as possible. No 
society of men and women, no human government, is or can 
be perfect; but it is folly to burn the whole structure in 
order to mend a leak in the roof. 



1 There are two interpretations of the words "collective bargaining;" one 
a bargain with the employes in any individual institution, another a bargain with 
distant agents, representatives or delegates of a certain craft. Every national 
conference between employers and employes since the world war, has split on 
the latter interpretation. Employers would not recognize the latter, but would 
the former. Organization but not dictation of labor, co-operation with no con- 
trol by labor, seems to be the point of view of the employers. The wisest leaders 
of organized labor advise against all forms of force. The problem seems to be 
one of spiritual righteousness and toleration, rather than law. 

[190] 



What Is Democracy? 

Democracy is not defiance of law and order. Liberty 
is not license. No fragment or segment of the people is 
greater and more important than the whole. Lynch law is 
wrong whether applied to one person or to the whole 
population called the government. It is just as wrong to 
murder a Republic as to murder an individual. Law and 
order will correct a social and industrial wrong far more 
quickly and satisfactorily than guns and clubs and rocks. 
Illegal force weakens a mob and does not correct the wrong. 

Democracy rightly understood and interpreted and 
applied, is the friend of the weak, the oppressed and the 
unfortunate. Misinterpreted and distorted it is as destruc- 
tive as the lightning or the torrent uncontrolled. No system 
however intrenched, if fundamentally wrong ; no institution 
employed to oppress; no dishonest public servant can stand 
adverse public opinion forever. And Democracy is the bul- 
wark of public opinion. As a rule, the people will do the 
right thing when they know all the facts and the whole 
truth. Changes which are called reforms, if permanent 
and worth while, come through the slow process of law and 
order. 

Let all patriots, of whatever class or calling, unite in 
making America a safer Republic in which to live. This is 
a problem sufficiently large and important to challenge the 
attention of this and succeeding generations. 



im] 



CHAPTER XXIV 
Moral and Spiritual Forces in Government 

WHILE the Federal Constitution, the ground-work of 
our government, is divorced from religion, it can not 
be divorced from moral and spiritual forces or vrhat we call 
religious inspiration, if it is to endure. Freedom of religious 
worship implies and encourages the acceptance and guidance 
of the moral and the spiritual. America was a protest 
against religious oppression and bigotry; the United States 
is a memorial to faith in Divine Providence, and the uplifting 
power of spiritual forces in the affairs of men. 

When the framers of the Federal Constitution, in that 
remarkable convention of 1787, found themselves unable to 
agree and doubtful as to their success, on the morning of 
June 27, 1787, the venerable Benjamin Franklin arose and 
said : ' ' Mr. President, the small progress we have made after 
four or five weeks close attendance and continual reasonings 
with each -other is, methinks, a melancholy proof of the im- 
perfections of the human understanding. We indeed seem 
to feel our own want of political wisdom since we have been 
running about in search of it. In this situation of this as- 
sembly, groping as it were in the dark to find political truth, 
and scarce able to distinguish it when presented to us, how 
3ias it happened, sir, that we have not hitherto once thought 
of humbly applying to the Father of Lights, to illuminate 
our understandings? In the beginning -of the contest with 
Great Britain, when we were sensible of danger, we had 
daily prayer in this room for divine protection. Our prayers, 

[192] 



Moral and Spiritual Forces in Government 

sir, were heard and they were graciously answered. All of us 
who were engaged in the struggle must have observed frequent 
instances of a superintending Providence in our favor. To 
that kind Providence we owe this happy opportunity of con- 
sulting in peace on the means of establishing our future na- 
tional felicity. And have we now forgotten that powerful 
friend? Or do we imagine that we no longer need his assis- 
tance? I have lived, sir, a long time, and the longer I live, 
ihe more convincing proofs I see of this truth — that God 
governs in the affairs -of men. And if a sparrow can not fall 
to the ground without his note, is it probable that an empire 
can rise without his aid ? We have been assured, sir, in sacred 
writings, that ' except the Lord build the house, they labor in 
vain that build it. ' I firmly believe this ; and I also believe that 
without his concurring aid we shall succeed in this political 
building no better than the builders of Babel. We shall 
be divided by our little partial local interests; our projects 
will be confounded ; and we shall become a reproach and by- 
word to future ages. And what is more, mankind may here- 
after from this unfortunate instance, despair of establishing 
governments by human wisdom, and leave it to chance, war 
and conquest. I therefore beg leave to move that henceforth 
prayers imploring the assistance of Heaven, and its blessings 
on our deliberations, be held in this assembly every morning 
before we proceed to business, and that one or more of the 
clergy of this city be requested to officiate in that service." 

On retiring from public service, George Washington 
wrote to his countrymen: "Of all the dispositions and habits 
which lead to political prosperity, religion and morality are 
indispensable supports. In vain would that man claim the 
tribute of patriotism who should labor to subvert these great 
pillars of human happiness, these firmest props of the duties 

[193] 



Unto The Hills 

of men and citizens. The mere politician, equally with the 
pious man, ought to respect and cherish them . . . Whatever 
may be conceded to the influence of refined education and 
minds of peculiar structure, reason and experience both forbid 
us to expect that national morality can prevail in exclusion of 
religious principles. It is substantially true that virtue or 
morality is a necessary spring of popular governments . . . 
Can it be that Providence has not connected the permanent 
felicity of a nation with its virtue? The experiment, at 
least, is recommended by every sentiment which enn-obles 
human nature." 

There was religion in the flag of Christopher Gadsden 
with its Liberty Tree and ''an appeal to God;" and in the 
old Massachusetts flag with its inscription **an appeal to 
Heaven." The Stars and Stripes, Old Glory, typify a belief 
that "our God is marching -on" to the goal of successful 
self-government. There is religion in our coinage adorned 
with the words ''in God we trust." 

What is today's test of the morality and the religion of 
the United States? There are more prisons, jails and houses 
of correction than ever. Crime is on the increase, according 
to statistics. Scandals, divorces and loose conduct appear to 
threaten the sanctity of the home and the purity of souls. 
More money is spent annually on confectionary, cigars and 
amusements than for educational and religious and charitable 
institutions. Is this conclusive evidence that the moral level 
of America is declining? By no means. The pessimist ex- 
claims that there is an increasing disregard for law and 
order, and a decline in respect for the courts. The optimist 
replies that this is only apparent, and a manifestation of the 
powerful popular reflection of the public press. It is the 
foam on the crest of a passing wave, not the deep current 

[194] 



Moral and Spiritual Forces in Government 

below. Crime is heralded far and wide; virtue is unpro- 
elaimed and its own reward indeed. If it is true that the 
moral level of America is declining and another ''fall of 
Home" is near, it were better to put the Ship of State out of 
commission at once, and end it all. 

The everlasting truth is that the finger of fate is the 
finger of Providence, a guiding hand which, amid the storms 
and strifes of national and private life points the way. A 
survey of the three centuries back of us permits of no other 
hypothesis. Great leaders have lifted their eyes unto the 
hills and received as if by inspiration, the righteous promise of 
God. The laws of Heaven are inexorable; and only when 
citizens have violated them have they suffered. If America 
is to endure (and America will endure) men must look up, 
statesmen must accept the guidance of Providence, leaders 
must inspire confidence in God and in themselves. 

There are some two hundred and fifty different religions 
and sects in the United States, numbering some 42,000,000 
followers. Of this number by far the largest are Christians. 
But this total following is less than one half the total popu- 
lation of continental United States. One half of the American 
people, presumably, have no religious abode or home. Yet 
the influence of that one half is tremendous. Were it 
not for the churches and for religion and religious insti- 
tutions, our whole government would collapse because of 
the collapse of moral and spiritual foundations. Nor is this 
religious and uplifting influence confined to the membership 
of the religious organizations; it extends to more than one- 
half, yea two-thirds of America's population, for many mil- 
lions without church -or religious affiliations are obsessed with 
that innate spiritual uplift which manifests itself in kindness, 
consideration and generosity. In other words, there is far 

[195] 



Unto The Hills 

more good than bad in America; and if another national 
crisis comes, this statement will be verified. 

There is more righteousness than religion in America; 
and many are prone to say that this is because religion has 
lost its hold. But the greatest power religion can have is 
the power of righteousness; and righteousness becomes a 
mere human attribute without religion. 

Often it is said that Christianity has proved a failure. 
''Not so," said the late Philips Brooks, "because it has never 
been tried." Christianity is having a new awakening; it is 
being divorced from mere dogmatism and baptized in divine 
righteousness. There is one common ground where all re- 
ligions and creeds may, nay should, meet ; and that is the field 
of spiritual battle with wrong and injustice. Right here is 
where politics, public service and national problems will meet 
the moral and religious forces of the future. They will join 
hands and lift America into the sunlight of real liberty and 
justice. 

Never before since human thought appeared, have the 
problems for the individual, for society and for the Nation 
seemed more tremendous than now. It is common-place to 
say that there is seething unrest, doubt of the sanctions of 
religion, a suspicion that something is going to happen to 
destroy our so-called civilization and our government. Swift- 
ly moving events appear to challenge existing institutions — 
social, economic and religious. There is mingled dread and 
hope. Are the institutions, religious as well as political, 
sufficiently strong to stand the test of the coming years ? Or 
is there to be a crash, a groping in the dark and a new world ? 

Let us pause and think. There can be no sound political, 
social or economic structure that does not rest on a moral and 
religious foundation. All private and public problems should 

[196] 



Moral and Spiritual Forces in Government 

be solved in the atmosphere and amid the surroundings of 
courage, hope, confidence, humanity and divinity. Every 
perplexing problem now facing Congress, executives and 
judges, must be approached in the light of moral purity and 
religious illumination. The road is obscured by darkness and 
doubt, if Providence is shut out. 

If our legislators and public men of today and the future 
are to solve the big problems of their time, they must be 
receptive to the powerful moral and spiritual forces of the 
Universe, and let Providence enter. A spiritual force may 
be somewhat foreign to the experience of the average poli- 
tician, either legislator or executive; yet nothing but com- 
munion with that force will best develop his powers and arm 
him with tools of permanent structure and implements of 
imperishable value. The fruits of civilization -or of legislation 
do not consist wholly of factories, machines, wealth, fertile 
fields or attractive cities. They are to be found in communi- 
ties which have learned to live together in peace and good 
will. Civilization if permanent, must be another name for 
the Kingdom of God. That is built of the spirit alone. This 
may seem strange to the politician or student of government, 
but it is true eternally. 

It is altogether fitting and proper to acknowledge that 
the moral and spiritual forces back of a century of effort 
towards peace and limitation of armament, have been in the 
churches and kindred religious organizations. Is it fair or 
just to argue that because there were centuries of war in the 
name of the ''Prince of Peace;" because the Crusaders of the 
church were agents of war and the Crusades a crime against 
the spirit of Christianity, therefore Christianity and the Bible 
failed miserably ? Is it fair to conclude that because the wars 
of recent times have been wars of professing Christians, there 

[197] 



Unto The Hills 

is no alchemy in the doctrine of the Nazarene ? On the con- 
trary, the Christian church has "kept a little flame burning 
on the altar of peace through many bloody centuries." Its 
influence has been moral and spiritual. Obviously whatever 
has been gained thus far in the fight against war and for 
limitation of armament, is due to the church and other re- 
ligious forces. 

In a recent address Elihu Root said : * ' The world is full 
of hate because of the incapacity of the people to become truly 
civilized. The development of character must come through 
exercise by the people, of the virtues that make human char- 
acter — mercy, compassion, kindly consideration, brotherly 
affection, sympathy with fellow men, unselfish willingness 
to sacrifice for others. ' ' In his Arlington address of Novem- 
ber 11, 1921, on the eve of the Arms Conference, President 
Harding said: ''The representatives -of the leading nations 
of the world are assembled bringing a message from peoples 
hungering and thirsting for better relationships." From the 
First International Peace Congress in 1843 to the Limitation 
of Naval Armament Conference in 1921, including the two 
Hague Peace Conferences of 1899 and 1906, the m'oral and 
spiritual forces have been at work. Despite all discourage- 
ments and apparent failures, each successive conference 
marked "a continual progress toward making the practice of 
civilized nations conform to their peaceful professions." 
The Japanese-Russian war, the Spanish-American war and the 
world war were sacrifices, bringing out in bold contrast the 
leavening power of moral and spiritual forces. Righteous- 
ness among nations and peoples was a passion with the late 
Theodore Roosevelt. The st-ory of his life is a tribute to the 
need and worth of m-oral and spiritual power in the affairs 
of men and governments. The noblest part of his Nobel 

[198] 



Moral and Spiritual Forces in Government 

prize address at Christiana was : ' ' Granted sincerity of pur- 
pose, the great powers -of the world should find no insur- 
mountable difficulty in reaching an agreement which would 
put an end to the present and growing extravagance of expen- 
diture on naval armament." 

Unless all signs fail, America is passing through a trans- 
ition period, politically, socially and economically. Some 
mysterious force is taking possession of affairs and leading 
on. The agnostic and unbeliever in public life (and there 
are many) scoff at this, and persist in driving their chariots 
rough-shod and reckless. The self-seeking politician defies all 
opposition and scatters his enemies along the highway. The 
tool of the ungodly does as he is told and says in his heart: 
''There is no God." The sycophant of the opulent 
and over-bearing makes bold pretense with a cowardly 
heart. Is it any wonder that some -one cries out: ''Congress 
is at a low level ; the government is falling ! ' ' 

Out of the turmoil of polities, out of the confusion of 
thought in public affairs comes the comforting voice : 

"God's in His Heaven 
All's well with the world." 

This is a spiritual voice calling to groping legislators 
and executives to have faith and lift their eyes unto the hills. 

A former American jurist of standing and culture, is 
quoted as having made this observation : ' ' The moral leader- 
ship which was so certainly within our country 's grasp at the 
close of the world war, is passing, plainly passing, to Great 
Britain." Is this true? As a result of the war, the British 
Empire has expanded to 3,972,000 square miles, with a popu- 
lation of 51,725,000 people. The aggregate area -of the British 

[199] 



Unto The Hills 

Empire is one-fourth of the land surface of the globe, totaling 
15,000,000 square miles, with a population of 475,000,000 or 
approximately -one-fourth of the total population of the world. 
It is the mightiest empire in history; maintained by what? 
By moral leadership ? No ; by force. What did the United 
States get out of the world war? Nothing but a huge debt, 
and thousands of soldiers' graves. The United States asked 
for nothing. 

''Moral leadership" is measured, not by what is gained in 
territory and power, but by what is gained in the way of 
unselfish sacrifice. Weighed in these scales, the moral leader- 
ship of the world, on the very day the armistice was signed, 
was with America, not Great Britain. 

Great Britain has eighteen universities and 50,000 stu- 
dents; and about 52,000 churches and chapels. The United 
States has 554 universities and colleges, with 260,000 students ; 
and 200,000 churches. The United States spends $650,000,000 
annually on its public schools. Judging from these few fig- 
ures, has the United States surrendered the "m-oral leader- 
ship ' ' of the world to Great Britain or any other country ? 

A sinister internationalism is firing the temples of the 
past, and seeking the destruction of the priceless heritage 
which the struggles and sacrifices of the past have bequeathed 
to us. The unmistakable lessons of history are ignored. 
Strange cries are heard in denunciation of the national spirit 
and national life. 

America needs another baptism of nationalism, a revival 
of patriotism, demonstrating that the United States has not 
transferred the moral leadership of the world to Great Britain 
or any other people, but rather holds to the ancient traditions 
that moral leadership comes from unselfish devotion to human- 

[200] 



Moral and Spiritual Forces in Government 

ity, not from imperial power and the spoils of war. Our moral 
leadership will endure if we lift our eyes unto the hills. 

It is perfectly obvious that something more than human 
agency must intervene to calm the troubled waters of national 
life and reconcile the differences among men and women. 
Congress is a human agency. A President is a human 
agency. They have limitations even if built of the wisest 
and best material. The hearts and souls of all must be at- 
tuned to the divine spirit if America is to be saved, and if 
what we call civilization is to endure. This is a practical pro- 
gram, however unfamiliar to many. It is human experience. 
It is divine plan. 



[201] 



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